of that day’s activity. The technique of including the day’sprice range takes into account all of the activity and is the morecommon usage. (See Figure 4.8.)70 Chapter 4
 
Figure 4.8 The correctdrawing of a trendlineshould include the entireday’s trading range.
 
How to Handle Small Trendline Penetrations
Sometimes prices will violate a trendline on an intraday basis, butthen close in the direction of the original trend, leaving the analystin some doubt as to whether or not the trendline has actually beenbroken. (See Figure 4.9.) Figure 4.9 shows how such a situation mightlook. Prices did dip under the trendline during the day, but closedback above the up trendline. Should the trendline be redrawn?
 
Figure 4.9 Sometimes an intraday violation of a trendline will leave thechartist in doubt as to whether the original trendline is still valid or if a newline should be drawn. A compromise is to keep the original trendline, but drawa new dotted line until it can be better determined which is the truer line.Basic Concepts of Trend 71
Unfortunately, there’s no hard and fast rule to follow insuch a situation. Sometimes it is best to ignore the minor breach,especially if subsequent market action proves that the originalline is still valid.
What Constitutes a Valid Breakingof a Trendline?
As a general rule, a close beyond the trendline is more significant thanjust an intraday penetration. To go a step further, sometimes even aclosing penetration is not enough. Most technicians employ avariety of time and price filters in an attempt to isolate validtrendline penetrations and eliminate bad signals or “whipsaws.”One example of a price filter is the 3% penetration criteria. Thisprice filter is used mainly for the breaking of longer term trend-lines, but requires that the trendline be broken, on a closing basis,by at least 3%. (The 3% rule doesn’t apply to some financialfutures, such as the interest rate markets.)
If, for example, gold prices broke a major up trendline at$400, prices would have to close below that line by 3% of theprice level where the line was broken (in this case, prices wouldhave to close $12 below the trendline, or at $388). Obviously, a$12 penetration criteria would not be appropriate for shorter termtrading. Perhaps a 1% criterion would serve better in such cases.The % rule represents just one type of price filter. Stock chartists,for example, might require a full point penetration and ignorefractional moves. There is tradeoff involved in the use of any typeof filter. If the filter is too small, it won’t be very useful in reduc-ing the impact of whipsaws. If it’s too big, then much of the ini-tial move will be missed before a valid signal is given. Here again,the trader must determine what type of filter is best suited to thedegree of trend being followed, always making allowances for thedifferences in the individuals markets.
An alternative to a price filter (requiring that a trendline bebroken by some predetermined price increment or percentageamount) is a time filter. A common time filter is the two day rule.In other words, to have a valid breaking of a trendline, pricesmust close beyond the trendline for two successive days. To break72 Chapter 4
an up trendline, therefore, prices must close under the trendlinetwo days in a row. A one day violation would not count. The 1-3% rule and the two day rule are also applied to the breaking ofimportant support and resistance levels, not just to major trend-lines. Another filter would require a Friday close beyond a majorbreakout point to ensure a weekly signal.
How Trendlines Reverse Roles
It was mentioned earlier that support and resistance levels becamethe opposite once violated. The same principle holds true oftrendlines. (See Figures 4.10a-c.) In other words, an up trendline(a support line) will usually become a resistance line once it’s deci-sively broken. A down trendline (a resistance line) will oftenbecome a support line once it’s decisively broken. This is why it’susually a good idea to project all trendlines as far out to the righton the chart as possible even after they’ve been broken. It’s sur-prising how often old trendlines act as support and resistancelines again in the future, but in the opposite role.
Measuring Implications of Trendlines
Trendlines can be used to help determine price objectives. We'llhave a lot more to say about price objectives in the next two chap-
Figure 4.10aExample of a risingsupport line becom-ing resistance.Usually a supportline will function asa resistance barrieron subsequent ral-lies, after it hasbeen broken on thedownside.Basic Concepts of Trend 73
Figure 4.10bVery often a downtrendline willbecome a supportline once it’s beenbroken on theupside,
 
40/14/97 {(*UDX) Us Dollar Index
hy
 
 
Daily Bar Chart
Broken Up TrendlineBecoming Resistance
 
 
 
 
 
 
Figure 4.10c = Trendlines also reverse roles. On this chart, the broken uptrendline became a resistance barrier on the following rally attempt.74 Chapter 4
 
ters on price patterns. In fact, some of the price objectivesaddressed that are derived from various price patterns are similarto the one we'll cover here with trendlines. Stated briefly, once atrendline is broken, prices will usually move a distance beyondthe trendline equal to the vertical distance that prices achieved onthe other side of the line, prior to the trend reversal.
In other words, if in the prior uptrend, prices moved $50above the up trendline (measured vertically), then prices would beexpected to drop that same $50 below the trendline after it’s broken.In the next chapter, for example, we'll see that this measuring ruleusing the trendline is similar to that used for the well-known headand shoulders reversal pattern, where the distance from the “head” tothe “neckline” is projected beyond that line once it’s broken.
THE FAN PRINCIPLE
This brings us to another interesting use of the trendline—the fanprinciple. (See Figures 4.11a-c.) Sometimes after the violation of anup trendline, prices will decline a bit before rallying back to thebottom of the old up trendline (now a resistance line). In Figure4.11a, notice how prices rallied to but failed to penetrate line 1. A
 
Figure 4.11la Example of the fan principle. The breaking of the thirdtrendline signals the reversal of a trend. Notice also that the broken trend-lines 1 and 2 often become resistance lines.Basic Concepts of Trend 75
 
Figure 4.11b = The fan principle at a bottom. The breaking of the thirdtrendline signals the upside trend reversal. The previously broken trendlines(1 and 2) often become support levels.
 
(*RUT) Russell 2000 index
Fan Linas
 
 
 
 
 
Figure 4.11c Fan lines are drawn along successive peaks as shown in thischart. The breaking of the third fan line usually signals the start of the uptrend.76 Chapter 4
 
second trendline (line 2) can now be drawn, which is also broken.After another failed rally attempt, a third line is drawn (line 3).The breaking of that third trendline is usually an indication that pricesare headed lower. In Figure 4.11b, the breaking of the third downtrendline (line 3) constitutes a new uptrend signal. Notice in theseexamples how previously broken support lines became resistanceand resistance lines became support. The term “fan principle”derives from the appearance of the lines that gradually flatten out,resembling a fan. The important point to remember here is that thebreaking of the third line is the valid trend reversal signal.
THE IMPORTANCE OF THENUMBER THREE
In examining the three lines in the fan principle, it’s interestingto note how often the number three shows up in the study oftechnical analysis and the important role it plays in so many tech-nical approaches. For example, the fan principle uses three lines;major bull and bear markets usually have three major phases(Dow Theory and Elliott Wave Theory); there are three kinds ofgaps (to be covered shortly); some of the more commonly knownreversal patterns, such as the triple top and the head and shoulders,have three prominent peaks; there are three different classifica-tions of trend (major, secondary, and minor) and three trenddirections (up, down, and sideways); among the generally accept-ed continuation patterns, there are three types of triangles—thesymmetrical, ascending, and descending; there are three principlesources of information—price, volume, and open interest. Forwhatever the reason, the number three plays a very prominentrole throughout the entire field of technical analysis.
THE RELATIVE STEEPNESS OFTHE TRENDLINE
The relative steepness of the trendline is also important. In gen-eral, most important up trendlines tend to approximate an aver-age slope of 45 degrees. Some chartists simply draw a 45 degreeBasic Concepts of Trend 77
 
Figure 4.12 Mostvalid trendlines rise at anangle approximating 45degrees (see line 2). If thetrendline is too steep (line1), it usually indicates
2 that the rate of ascent isnot sustainable. A trend-line that is too flat (line3) suggests that theuptrend is too weak andprobably suspect. Many
3 technicians use 45 degree
lines from previous topsor bottoms as majortrendlines.
line on the chart from a prominent high or low and use this as amajor trendline. The 45 degree line was one of the techniquesfavored by W. D. Gann. Such a line reflects a situation whereprices are advancing or declining at such a rate that price andtime are in perfect balance.
If a trendline is too steep (see line 1 in Figure 4.12), it usu-ally indicates that prices are advancing too rapidly and that thecurrent steep ascent will not be sustained. The breaking of thatsteep trendline may be just a reaction back to a more sustainableslope closer to the 45 degree line (line 2). If a trendline is too flat(see line 3), it may indicate that the uptrend is too weak and notto be trusted.
How to Adjust Trendlines
Sometimes trendlines have to be adjusted to fit a slowing or anaccelerating trend. (See Figure 4.13 and Figures 4.14a and b.) Forexample, as shown in the previous case, if a steep trendline is bro-ken, a slower trendline might have to be drawn. If the originaltrendline is too flat, it may have to be redrawn at a steeper angle.Figure 4.13 shows a situation where the breaking of the steepertrendline (line 1) necessitated the drawing of a slower line (line 2).78 Chapter 4
 
Figure 4.13 Exampleof a trendline that is too
2 steep (line 1). The originalup trendline proved toosteep. Often the breaking ofa Steep trendline is only anadjustment to a slower andmore sustainable up trend-line (line 2).
In Figure 4.14a, the original trendline (line 1) is too flatand has to be redrawn at a steeper angle (line 2). The uptrendaccelerated, requiring a steeper line. A trendline that is too faraway from the price action is obviously of little use in tracking thetrend.
In the case of an accelerating trend, sometimes severaltrendlines may have to be drawn at increasingly steeper angles. Inmy experience, however, where steeper trendlines become neces-sary, it is best to resort to another tool—the moving average—which is the same as a curvilinear trendline. One of the advantages
Figure 4.14aExample of an uptrendline that is tooflat (line 1). Line 1proved too slow asthe uptrend accelerat-ed. In this case, asecond and steepertrendline (line 2)should be drawn tomore closely track therising trend.Basic Concepts of Trend 79
 
berosie4 (*SPX) S&P 500 Stock Index 02/27/98
Weekly Bar Chart
§ @ 2 2 2 8 2 8 &
 
 
 
E 8
 
 
Figure 4.14b An accelerating uptrend requires the drawing of steepertrendlines as shown in this chart. The steepest trendline becomes the mostimportant one.
of having access to several different types of technical indicators isbeing able to choose the one most appropriate for a given situation.All of the techniques covered in this book work well in certain sit-uations, but not so well in others. By having an arsenal of tools tofall back on, the technician can quickly switch from one tool toanother that might work better in a given situation. An acceleratedtrend is one of those cases where a moving average would be moreuseful than a series of steeper and steeper trendlines.
Just as there are several different degrees of trend in effectat any one time, so is there a need for different trendlines to mea-sure those various trends. A major up trendline, for example,would connect the low points of the major uptrend, while a short-er and more sensitive line might be used for secondary swings. Aneven shorter line can measure the short term movements. (SeeFigure 4.15.)80 Chapter 4
 
Figure 4.15 Different trendlines are used to define the different degrees oftrend. Line 1 in the above example is the major up trendline, defining themajor uptrend. Lines 2, 3, and 4 define the intermediate uptrends. Finally,line 5 defines a shorter term advance within the last intermediate uptrend.Technicians use many different trendlines on the same chart.
THE CHANNEL LINE
The channel line, or the return line as it is sometimes called, isanother useful variation of the trendline technique. Sometimesprices trend between two parallel lines—the basic trendline andthe channel line. Obviously, when this is the case and when theanalyst recognizes that a channel exists, this knowledge can beused to profitable advantage.
The drawing of the channel line is relatively simple. In anuptrend (see Figure 4.16a), first draw the basic up trendline alongBasic Concepts of Trend 81
 
Figure 4.16aExample of atrend channel.Once the basic uptrendline is drawn(below points 1and 3) a channel,or return, line(dotted line) canbe projected overthe first peak at2, which is paral-lel to the basic uptrendline.
 
the lows. Then draw a dotted line from the first prominent peak(point 2), which is parallel to the basic up trendline. Both linesmove up to the right, forming a channel. If the next rally reachesand backs off from the channel line (at point 4), then a channelmay exist. If prices then drop back to the original trendline (atpoint 5), then a channel probably does exist. The same holds truefor a downtrend (Figure 4.16b), but of course in the oppositedirection.
Figure 4.16bA trend channelin a downtrend.The channel isprojected down-ward from thefirst low at point2, parallel to thedown trendlinealong the 1 and 3peaks. Prices willoften remainwithin such atrend channel.
 82 Chapter 4
 
 
pe (*DWU) Dow Utilities
Monthly Line Chart
Long Term Channel Lines
 
 
 
 
tao7 —i Ta a 4 Ys ve 7 ve Yo “o0_e1_ eo "bos “e_be “ey “be Boot ots
 
Figure 4.16c Notice how prices fluctuated between the upper and lowerparallel channels over a period of 25 years. The 1987, 1989, and 1993 topsoccurred right at the upper channel line. The 1994 bottom bounced off thelower trendline.
The reader should immediately see the value of such a sit-uation. The basic up trendline can be used for the initiation ofnew long positions. The channel line can be used for short termprofit taking. More aggressive traders might even use the channelline to initiate a countertrend short position, although trading inthe opposite direction of the prevailing trend can be a dangerousand usually costly tactic. As in the case of the basic trendline, thelonger the channel remains intact and the more often it is suc-cessfully tested, the more important and reliable it becomes.
The breaking of the major trendline indicates an impor-tant change in trend. But the breaking of a rising channel line hasexactly the opposite meaning, and signals an acceleration of theexisting trend. Some traders view the clearing of the upper line inan uptrend as a reason to add to long positions.Basic Concepts of Trend 83
Figure 4.17
The failure to reachthe upper end of thechannel is often anearly warning thatthe lower line willbe broken. Noticethe failure to reachthe upper line atpoint 5 is followedby the breaking ofthe basic up trend-line at point 6.
 
Another way to use the channel technique is to spot fail-ures to reach the channel line, usually a sign of a weakening trend.In Figure 4.17, the failure of prices to reach the top of the channel(at point 5) may be an early warning that the trend is turning, andincreases the odds that the other line (the basic up trendline) willbe broken. As a general rule of thumb, the failure of any movewithin an established price channel to reach one side of the chan-nel usually indicates that the trend is shifting, and increases thelikelihood that the other side of the channel will be broken.
The channel can also be used to adjust the basic trendline.(See Figures 4.18 and 4.19.) If prices move above a projected ris-ing channel line by a significant amount, it usually indicates astrengthening trend. Some chartists then draw a steeper basic uptrendline from the last reaction low parallel to the new channelline (as demonstrated in Figure 4.18). Often, the new steeper sup-port line functions better than the old flatter line. Similarly, thefailure of an uptrend to reach the upper end of a channel justi-fies the drawing of a new support line under the last reaction lowparallel to the new resistance line over the past two peaks (asshown in Figure 4.19).Chapter 4
 
 
 
Figure 4.18When the upperchannel line isbroken (as inwave 5), manychartists willredraw the basicup trendline par-allel to the newupper channelline. In otherwords, line 4-6 isdrawn parallel toline 3-5. Becausethe uptrend isaccelerating, itstands to reasonthat the basic uptrendline will dolikewise.
Figure 4.19When prices failto reach the upperchannel line, anda down trendlineis drawn over thetwo decliningpeaks (line 3-5), atentative channelline can be drawnfrom the low atpoint 4 parallel toline 3-5. Thelower channelline sometimesindicates whereinitial supportwill be evident.Basic Concepts of Trend 85
Channel lines have measuring implications. Once a break-out occurs from an existing price channel, prices usually travel a dis-tance equal to the width of the channel. Therefore, the user has tosimply measure the width of the channel and then project thatamount from the point at which either trendline is broken.
It should always be kept in mind, however, that of the twolines, the basic trendline is by far the more important and themore reliable. The channel line is a secondary use of the trendlinetechnique. But the use of the channel line works often enough tojustify its inclusion in the chartist’s toolkit.
PERCENTAGE RETRACEMENTS
In all of the previous examples of uptrends and downtrends, thereader has no doubt noticed that after a particular market move,prices retrace a portion of the previous trend before resuming themove in the original direction. These countertrend moves tend tofall into certain predictable percentage parameters. The bestknown application of the phenomenon is the 50% retracement.Let’s say, for example, that a market is trending higher and trav-els from the 100 level to the 200 level. Very often, the subsequentreaction retraces about half of the prior move, to about the 150level, before upward momentum is regained. This is a very well-known market tendency and happens quite frequently. Also,these percentage retracements apply to any degree of trend—major, secondary, and near term.
Besides the 50% retracement, there are minimum and max-imum percentage parameters that are also widely recognized—theone-third and the two-thirds retracements. In other words, the pricetrend can be divided into thirds. Usually, a minimum retracementis about 33% and a maximum about 66%. What this means is that,in a correction of a strong trend, the market usually retraces at leasta third of the previous move. This is very useful information for anumber of reasons. If a trader is looking for a buying area underthe market, he or she can just compute a 33-50% zone on the chartand use that price zone as a general frame of reference for buyingopportunities. (See Figures 4.20a and Db.)86 Chapter 4
 
33% Retracement
SO% Retracement
66% Retracement
 
Figure 4.20a Prices often retrace about half of the prior trend beforeresuming in the original direction. This example shows a 50% retracement.The minimum retracement is one-third and the maximum, two-thirds of theprior trend.
The maximum retracement parameter is 66%, whichbecomes an especially critical area. If the prior trend is to be main-tained, the correction must stop at the two-thirds point. This thenbecomes a relatively low risk buying area in an uptrend or sellingarea in a downtrend. If prices move beyond the two-thirds point,the odds then favor a trend reversal rather than just a retrace-ment. The move usually then retraces the entire 100% of the priortrend.
You may have noticed that the three percentage retrace-ment parameters we’ve mentioned so far—50%, 33%, and 66%—are taken right from the original Dow Theory. When we get to theElliott Wave Theory and Fibonacci ratios, we will see that follow-ers of that approach use percentage retracements of 38% and62%. I prefer to combine both approaches for a minimum retrace-ment zone of 33-38% and a maximum zone of 62-66%. Sometechnicians round off these numbers even further to arrive at a40-60% retracement zone.Basic Concepts of Trend 87
 
03/12/97 (*DWI X) Dow Industrials
Daily Bar Chart
62%
% Retracements
 
 
 
er Ta ive ny TASS Os Ree TT
 
Figure 4.20b = The three horizontal lines mark the 38%, 50%, and 62%retracement levels measured from the April 1997 low to the August high. Thefirst decline fell to the 38% line, the second decline to the 62% line, and thethird near the 50% line. Most corrections will find support in the 38% to50% retracement zones. The 38% and 62% lines are Fibonacci retracementsand are popular with chartists.
Students of W. D. Gann are aware that he broke down thetrend structure into eighths—1/, 2/,, 3/, 4/g, 5/g, °/g, 7/g, 8/g.However, even Gann attached special importance to the 3/, (38%),4/3 (50%), and 5/g (62%) retracement numbers and also felt it wasimportant to divide the trend into thirds—1/3 (33%) and 2/3 (66%).
SPEED RESISTANCE LINES
Speaking of thirds, let’s touch on another technique that com-bines the trendline with percentage retracements—speedlines. Thistechnique, developed by Edson Gould, is actually an adaptation88 Chapter 4
of the idea of dividing the trend into thirds. The main differencefrom the percentage retracement concept is that the speed resis-tance lines (or speedlines) measure the rate of ascent or descent ofa trend (in other words, its speed).
To construct a bullish speedline, find the highest point in thecurrent uptrend. (See Figure 4.21a.) From that high point on thechart, a vertical line is drawn toward the bottom of the chart towhere the trend began. That vertical line is then divided into thirds.A trendline is then drawn from the beginning of the trend throughthe two points marked off on the vertical line, representing theone-third and two-thirds points. In a downtrend, just reverse theprocess. Measure the vertical distance from the low point in thedowntrend to the beginning of the trend, and draw two lines fromthe beginning of the trend through the one-third and two-thirdspoints on the vertical line. (See Figures 4.21a and b.)
(2) 2/3 Speedline
{(3) 1/3 Speedline
 
Figure 4.21a Examples of speed resistance lines in an uptrend. The verti-cal distance from the peak to the beginning of the trend is divided into thirds.Two trendlines are then drawn from point 1 through points 2 and 3. The upperline is the 2/3 speedline and the lower, the #/;. The lines should act as supportduring market corrections. When they’re broken, they revert to resistance lineson bounces. Sometimes these speedlines intersect price action.Basic Concepts of Trend 89
 
Figure 4.21b  Speedlines in a downtrend.
Each time a new high is set in an uptrend or a new lowin a downtrend, a new set of lines must be drawn (because thereis now a new high or low point). Because the speedlines aredrawn from the beginning of the trend to the one-third andtwo-thirds points, those trendlines may sometimes movethrough some of the price action. This is one case where trend-lines are not drawn under lows or over highs, but actuallythrough the price action.
If an uptrend is in the process of correcting itself, thedownside correction will usually stop at the higher speedline (the2/3, speedline). If not, prices will drop to the lower speedline (the1/3 speedline). If the lower line is also broken, prices will probablycontinue all the way to the beginning of the prior trend. In adowntrend, the breaking of the lower line indicates a probablerally to the higher line. If that is broken, a rally to the top of theprior trend would be indicated.
As with all trendlines, speedlines reverse roles once theyare broken. Therefore, during the correction of an uptrend, if theupper line (2/3 line) is broken and prices fall to the 1/3 line andrally from there, that upper line becomes a resistance barrier. Onlywhen that upper line is broken would a signal be given that theold highs will probably be challenged. The same principle holdstrue in downtrends.90 Chapter 4
 
GANN AND FIBONACCI FAN LINES
Charting software also allows the drawing of Gann and Fibonaccifan lines. Fibonacci fan lines are drawn in the same fashion as thespeedline. Except that Fibonacci lines are drawn at 38% and 62%angles. (We’ll explain where those 38% and 62% numbers comefrom in Chapter 13, “Elliott Wave Theory.”) Gann lines (namedafter the legendary commodity trader, W.D. Gann) are trendlinesdrawn from prominent tops or bottoms at specific geometricangles. The most important Gann line is drawn at a 45 degree anglefrom a peak or trough. Steeper Gann lines can be drawn during anuptrend at 633/, degree and 75 degree angles. Flatter Gann linescan be drawn at 26!/, and 15 degree lines. It’s possible to draw asmany as nine different Gann lines.
Gann and Fibonacci lines are used in the same way asspeedlines. They are supposed to provide support during down-ward corrections. When one line is broken, prices will usually fallto the next lower line. Gann lines are somewhat controversial.Even if one of them works, you can’t be sure in advance whichone it will be. Some chartists question the validity of drawing geo-metric trendlines at all.
INTERNAL TRENDLINES
These are variations of the trendline that don’t rely on extremehighs or lows. Instead, internal trendlines are drawn through theprice action and connect as many internal peaks or troughs aspossible. Some chartists develop a good eye for this type of trend-line and find them useful. The problem with internal trendlines isthat their drawing is very subjective; whereas the rules for draw-ing of more traditional trendlines along the extreme highs andlows are more exact. (See Figure 4.21c.)
REVERSAL DAYS
Another important building block is the reversal day. This particu-lar chart formation goes by many names—the top reversal day,Basic Concepts of Trend 91
 
(“DWI X) Dow Industrials
 
 
Daily Bar Chart
Example of Intemal Trendline
 
 
 
 
 
 
Figure 4.21c = Internal trendlines are drawn through the price actionconnecting as many highs and lows as possible. This internal trendline’drawn along the early 1996 highs provided support a year later during theSpring of 1997.
the bottom reversal day, the buying or selling climax, and the keyreversal day. By itself, this formation is not of major importance.But, taken in the context of other technical information, it cansometimes be significant. Let’s first define what a reversal day is.
A reversal day takes place either at a top or a bottom. Thegenerally accepted definition of a top reversal day is the setting ofa new high in an uptrend, followed by a lower close on the sameday. In other words, prices set a new high for a given upmove atsome point during the day (usually at or near the opening) thenweaken and actually close lower than the previous day’s closing.A bottom reversal day would be a new low during the day followedby a higher close.
The wider the range for the day and the heavier the vol-ume, the more significant is the signal for a possible near term92 Chapter 4
trend reversal. Figures 4.22a-b show what both would look like ona bar chart. Note the heavier volume on the reversal day. Alsonotice that both the high and low on the reversal day exceed therange of the previous day, forming an outside day. While an out-side day is not a requirement for a reversal day, it does carry moresignificance. (See Figure 4.22c.)
The bottom reversal day is sometimes referred to as a sell-ing climax. This is usually a dramatic turnaround at the bottom ofa down move where all the discouraged longs have finally beenforced out of the market on heavy volume. The subsequentabsence of selling pressure creates a vacuum over the market,which prices quickly rally to fill. The selling climax is one of themore dramatic examples of the reversal day and, while it may notmark the final bottom of a falling market, it usually signals that asignificant low has been seen.
 
Figure 4.22a Example of a Figure 4.22b Example of atop reversal day. The heavier bottom reversal day. If volume isthe volume on the reversal day especially heavy, bottom reversalsand the wider the range, the are