Concept
Two-bar Reversal
Two-bar Reversal is a Chart & Candlestick Patterns concept. The Library holds 4 implementations, each one a working definition you can pull into Quant.
Top Two-bar Reversal indicators
4 total
What is a Two-bar Reversal?
A two-bar reversal is a pair of consecutive, comparably strong bars that close at opposite ends of their ranges. At a low, a wide bear bar closing near its bottom is followed immediately by a wide bull bar closing near its top, retracing most or all of the first bar's ground; the bearish version mirrors this at highs. Together the two bars paint a V at the extreme: full commitment one way, then full commitment the other.
The pattern's information is the trap. Anyone who sold the first bar's strong close is underwater within one bar, and their exits help fuel the reversal. Merged into a single candle on double the timeframe, the pair typically collapses into a pin bar or hammer, a useful cross-check that the two readings agree.
How traders use it
- As a reversal trigger at extremes: the pattern is traded at swing highs and lows, tested levels, or after a stop-run through a prior extreme; the common trigger is a break of the second bar's high (bullish case) with the stop beyond the pattern's opposite end.
- As a climax read after extended moves: a two-bar reversal at the end of a stretched, accelerating leg suggests the last sellers were absorbed at the low, while mid-range prints of the same shape carry far less information.
- As a strength gauge: the more of the first bar the second bar retraces, and the closer both closes sit to their opposite extremes, the cleaner the read; a second bar that closes mid-range downgrades the pattern.
More Two-bar Reversal implementations
Related concepts · Single/multi-bar (western)
Concept family
Chart & Candlestick Patterns
84 concepts mapped · 46 in the Library
Two-bar Reversal FAQ
How is a two-bar reversal different from an engulfing bar?
An engulfing bar must exceed the prior bar's range on both sides and close beyond it: one bar swallowing another. A two-bar reversal only requires two comparably strong bars closing in opposite directions; the second need not engulf the first. Many two-bar reversals also qualify as engulfing bars, but the categories are not identical.
Do two-bar reversals need to appear at a specific location?
Nothing forbids one mid-range, but the pattern's logic, trapped one-bar entrants forced to exit, is most meaningful at swing extremes, tested support or resistance, or after an extended leg. In the middle of a rotation the same shape is routine two-way traffic, so most traders filter the pattern by location before acting on it.
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