Education & Information
Sell Signals
High Pole Reversal
The high pole reversal pattern begins with a long column of Xs up, which is considered the high pole. A high pole is defined as a column of Xs that exceeds a previous column of Xs by at least three boxes. In the chart above, you will see that the second column of Xs exceeds the first column of Xs by six boxes. The Xs represent demand and eventually the buying will subside and supply will resurface causing the chart to reverse down in to a column of Os. If the initial amount of supply is substantial, often times it indicates a high is in place for the stock. The initial supply is considered substantial if the column of Os that follows the high pole retraces the high pole by more than 50%. To determine the 50% level one would count the number of Xs in the high pole column. In the chart above there are ten Xs in the high pole. Therefore, the next column of Os needs to retrace it by more than 50%, or by at least six Os. That happens at $38 in the chart above. In order for the high pole to be used effectively it is preferred that the stock is on a sell signal on its relative strength chart. We have found that if the stock advances toward the bearish resistance line and a high pole pattern is formed, it is a great time to sell that stock short.