When a longer term weekly or monthly type of reversal pattern shows up on a bar chart, it is much more significant than a reversal day. Each bar on a weekly chartt represents the entire week's price range with the close on Friday. The term upside weekly reversal is used when the market trades lower during the week, makes a new low for the move, then on Friday closes higher than the previous Friday's close.

Obviously, a weekly reversal is more significant that a daily reversal. They are watched closely as signaling important turning points for traders in stock trading and options trading. And of course, monthly reversals are more important than weekly reversals. These reversal apply to uptrends as well as downtrends.

Internal Trendlines Can Be Useful

Internal trendlines are variations of trendlines that do not rely on extreme highs or lows found in uptrends or downtrends. Instead, they are drawn through as many peaks and valleys in a trend as possible. The trader who can develop a keen eye for this tool will find it useful in trading.

The one drawback to using internal trendlines is the fact they are subjective, whereas, traditional trendlines are drawn along more exact highs and lows.

Andy Swan is co-founder and head trader for DaytradeTeam.com. To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.