This rally fades and price descends back toward a test of the last bottom low. At this moment the trader listens closely for the first bell to ring. A wide range reversal bar (doji or hammer) may appear close to the low price of the last bottom. Or volume spikes sharply but price does not fail. Better yet, a Turtle Reversal develops where price violates the last low by a few ticks and then prints a sharp move back above support. Should any or all of these events occur, we mark the potential second leg on our Big W.

Trade entry can be initiated aggressively near the bottom of the second leg if the bells ring loudly. The top of the shorter move marking the partial retracement of the last downward impulse (middle of the W) now becomes our main pivot price for analysis and further trade entry. For price to successfully return to this point, it must retrace 100% of the last fall (from the second low). This finally breaks the lower high, lower low bear cycle. In strong DBs, price will quickly surge to this price right off the second bottom.

A less aggressive long position can be entered when this new impulse retraces strongly through 62% of the fall into the second low. However, if a short-term exit is desired, sufficient profit potential must exist between the entry and the pivot price for this trade to make sense. Longer-term traders can hold positions as price mounts this pivot. At this point, it will often pause to test support. However, another upward leg is then expected.