Bearish advance block

Online Option Trading. . The Wall Street Journal Online


The bearish advance block is a bearish reversal pattern. It can predict the top of a trend.

It consists of three different days. The first day is a large up day. The second day opens and the security heads up. However during the middle of the day the bears come and push it down off of its highs.

The third day is similar to the 2nd. It opens and moves higher. However the bears come in and push the stock back down. That means there are two days that the bears were able to come in at the end and push the stock down. This would be the sell signal.

Why is a bearish advance block a downside signal? When the stock gets pushed down off of its highs two days in a row it can signal weakness in the security.