This is a variation on the 1 bar reversal. It is a 4 bar pattern with 3 bars setting up the trade for the fourth day. Day 1 must close at or near the bottom of that day's range. Day 2 opens at or near the close of day 1 and continues the prior day's sell off. Day 2 must also close at or near the low of that day's range. Day 3 must open at or near the close of day 2 and retrace back up to (or very near) the high of day 2. Also, day 3 must close at о near its high of the day If the stock opens or day 4 near the close of day 3 and begins to move up, buy it. The wider the range of bar 1, the better the trade.

Here is setup:

The inverse:

So, how do you find these reversal setup of bars? By trading and reviewing charts daily you will learn to pick out possible setups and earmark those stocks in your mind. When one of those particular stocks comes across the ticker, you go to that stock's screen and automatically know what you are looking for. If the setup is there, and you're getting a breatcout, consider taking the trade. The sell setup is an inverted reversal pattern. In a buy setup the expectation is that the stock will move up to or near the high of bar 1. In the inverted reversal sell setup you would expect the stock to sell off down to or near the low of bar 1.