The example below shows Caterpillar (CAT) with a spinning top forming in late May (1). The trend is clearly down so a resistance level is set to define a reversal breakout (confirmation). CAT did break this resistance level a few days later, but the breakout failed. Not all signals are perfect. The downtrend extended and CAT then formed two doji in mid June. A resistance level was marked after the doji and CAT broke resistance to confirm a reversal.