Vic Sperrandeo, in his excellent book METHODS OF A WALL STREET MASTER wrote about this trade.

"In an uptrend, if a higher high is made but fails to carry through, then prices drop below the previous high, then the trend is apt to reverse. This observation applies in any of the time frames, short, intermediate, or long." The failure to follow through usually occurs on LOW TO NORMAL VOLUME and the confirmation of reversal on HIGHER VOLUME.

Sperrandeo makes it very clear that a trader who invokes this trade, MUST be willing to admit defeat quickly. If the trade goes back to new highs, then the only option is to get out. That does not rule out another short if the market falls, but losses must be limited by clear stops at the 2b highs.

The 2b trade, of course, can work in reverse with a low, followed by a lower low, that then reverses and finishes above the initial low. A long would be placed on the failure to follow through lower (on low volume) with a stop below the initial low or no lower than the lowest low price.

This pattern works because of the large number of stops that would be placed as traders went with the trend. These would be triggered if prices moved adverse to the trend, and a rapid change in direction might occur.

This trade is one to keep in mind. I have seen it work well.