This post follows part 1 of the series on 1,2 and 3 bar reversal patterns.
Of course, we could say that the a 2 bar reversal means a break lower than the low of the previous bar, after two consecutively higher lows, higher highs and higher closes. This is one definition of a 2 bar reversal (indeed it will be the definition of a 3 bar reversal in the next post in this series – in case you can’t wait).
However, we will make it quicker to define a 2 bar reversal.
Very simply, in an upmove, a 2 bar reversal means the price goes below the close of the bar before the previous in a situation of 2 higher highs and higher closes.
In a downmove, a 2 bar reversal means the price goes above the close of the bar before the previous in a situation of two lower lows and lower closes.
Simple and effective rule. I will add some images later.