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Buy Signals
Bearish Signal Reversal
The bearish signal reversal pattern is one of the rarest point & figure patterns but very profitable when found. It consists of at least seven columns. The first six show lower columns of Xs and lower columns of Os creating bearish signals on the chart. During the seventh column or thereafter the bearish pattern is broken when a column of Xs exceeds the previous column of Xs reversing the bearish pattern. Similar to the bullish signal, this pattern should be treated differently depending on the major overall trend present in the stock (see major trends). If the stock is trading above the bullish support line a bearish signal reversal represents that a short-term correction in the stock is over and the main trend is reemerging. If it happens while the stock is trading below the bearish resistance line, the bearish signal reversal suggests that the stock’s advance will be limited to the level of the resistance line and, therefore, is more suitable for trading oriented investors.