reversal pattern is considered a reliable indicator.
first two days are Black Marubozu (open is the high, close is the low). The
next day is a black candlestick day gapping in the same direction, but trading
into the body of the second day. The last day is a Black Marubozu, gapping up
and selling to engulf the third day.
two Black Marubozus show the bears are strong and in control. The gap down is
bearish as well. The stock sells off again, indicating the bulls are giving up.
Once that happens, with no more sellers, the down trend stops. Once the shorts
start to cover, there are no sellers to block a bounce.