Wyckoff trading method, page-1432

Here are a few more two bar combinations to think about.......
(be aware that this is just a study of the individual bars themselves, and is not considering volume, the overall influence and background context of the chart, or where price is in relation to the major support and resistance levels on the chart).


Firstly, the initial bar (above) shows a wider spread and it closes down near its low, which infers 'ease of movement' towards the downside (the ease of movement lower suggests the seller's hold the upper hand over the buyers).  The second bar then attempts to rally, but only to about midbar of the first bar, so it was not a particularly strong rally.  And all of the gains were lost by the time this bar completes, leaving behind a level close.  The two closes together does suggest an element of potential support, however as all the gains were lost on the second bar, suggesting the inability to maintain a rally, this support is likely to be vulnerable, & further downside would reasonably be expected next bar.




This bar combination (above) shows weakness.  The initial bar moves lower with ease, closing poorly near the bottom of the bar.  Then the second bar gaps lower, closing just below midbar.  Yes there is narrowing of the spread in the second bar, however the gap lower and the fact that all the trading took place below the previous bar's low and close, suggests an inability to rally and the sellers remain in control.  Further downside should be expected.





This two bar combination shows a potentially strong upbar, closing up near its high.  This is followed by the second bar which trades at some point above the previous close and high, before losing all those gains and eventually closes below the previous bar's low.  This is a bearish reversal bar, where it is important to note the close of the second bar is below the first bar's low which is a particularly weak indication.  The increased spread of the second bar also suggests an increase in volatility, and further downside should be expected next bar.





The combination above shows a potentially strong first bar, closing up near its high, followed by the second bar with a much narrower spread, that has dipped lower at some point, then recovered to close level by the time the bar has completed.  The narrower spread of the second bar suggests reduced volatility as price dipped lower and challenged any sellers to come out.  And the two positive closes up near their highs, along with this reduced volatility, suggest that the next bar will be higher.