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A bearish signal reversed is a Point & Figure signal that reverses a downtrend. A downtrend is present because of lower lows and lower highs. Each column of O’s declines below the prior column to forge a lower low. Each column of X’s falls short of the prior column to forge a lower high. The combination of lower lows and lower highs creates the downtrend or the bearish signal. This signal is reversed when a column of X’s finally exceeds the prior column to forge a higher high. The chart for Southwest Airlines (LUV) shows lower lows from October (red A) until March (red 3). A move above 10 reversed this signal in September. Despite this bearish signal reversed alert, LUV remains below the downward trendline.
As you may have guessed, the opposite signal is a bullish signal reversed. An uptrend is present with a series of higher highs and higher lows. This uptrend is reversed when a column of X’s finally exceeds the prior column to forge a higher high. Aecom Tech (ACM) worked its way higher with an uptrend from April until July. A sharp decline in August (red 8) pushed prices below the prior column of O’s to reverse the uptrend. Despite this bullish signal reversed signal, ACM remains with an upward trendline (blue).
Annotations were made outside of Stockcharts.com by opening the chart image in a graphics-editing program. Bullish signal reversed, bearish signal reversed and other P&F alerts can be found on the P&F pattern scan page. Also check out the P&F charting books in our bookstore.
