Is an outside day with a higher close a bullish technical signal ?
An outside day implies that the market has tried the downside, run into decent support, the shorts have been squeezed by the longer term bulls and now some of those that went short are now jumping on the bandwaggon and going long. If we then see a higher close versusthe previous day, traders generally take this as a bullish signal and will look for the market to push on higher during the following day’s session. Spotting the reversal/potential reversal in the market down at the lows or sensing that the market psychology/sentiment is turning is how the most money is made out of this pattern, but, it can be difficult to see early on ! The sooner it is spotted, the sooner u can get in – but, if u miss it don’t despair because u can still get in later and use stops, as ever, to ensure you don’t get caught in a false move or a moveyou may have mis-diagnosed ! The reverse of the above is true for an outside day with a lower close compared to the previous day – ie it could lead to a lower day
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