Key Reversals - The only candle pattern worth watching!

R

RangeTrader

I love key reversals... The candle pattern that solidly confirms a trade...

The naysayers are like "I see key reversals everywhere... Nonsense, it can't be backtested..."

That's because they are missing and important key to the key reversal. Some of them matter and some of them don't. The key is the technical setup going into the key reversal. I can generally tell which ones do and don't matter even without lower technicals.

I prefer getting into a trade before the key reversal, however... I sometimes chase a trade if I can get in on the next candle after and ride it for a couple more candles. It really depends upon internals, market conditions... Etc.

But, the bottom line to judge a key reversal is this... A key reversal up WITHOUT a solid consolidation/selloff before it will likely fail. A key reversal down without a rally before it is unimportant. The ones that really hammer out gains for a number of candles are those that occur off a good divergence and have internals behind them too.

Wow... It's so nice to get off the volume charts for a while and switch back to my time candle charts for a bit. This is so freaking easy...

I am actually hoping market conditions stay like this for a while now. LoL...
 

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Quote from RangeTrader:

I love key reversals... The candle pattern that solidly confirms a trade...

The naysayers are like "I see key reversals everywhere... Nonsense, it can't be backtested..."

That's because they are missing and important key to the key reversal. Some of them matter and some of them don't. The key is the technical setup going into the key reversal. I can generally tell which ones do and don't matter even without lower technicals.

I prefer getting into a trade before the key reversal, however... I sometimes chase a trade if I can get in on the next candle after and ride it for a couple more candles. It really depends upon internals, market conditions... Etc.

But, the bottom line to judge a key reversal is this... A key reversal up WITHOUT a solid consolidation/selloff before it will likely fail. A key reversal down without a rally before it is unimportant. The ones that really hammer out gains for a number of candles are those that occur off a good divergence and have internals behind them too.

Wow... It's so nice to get off the volume charts for a while and switch back to my time candle charts for a bit. This is so freaking easy...

I am actually hoping market conditions stay like this for a while now. LoL...
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Anek is that you?
 
Quote from HurricaneUS:

Anek is that you?
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Who the heck is Anek?

A CME trader taught me how to read candle engulfments properly a year ago. I coded my custom engulf candles based after his rules. The current close vs the last couple opens and closes is really the key.

I only use them on and off... I still love Ashi's but these have less lag.
 
The chart examples aren't key reversals. And everything works in hindsight. You've been trading since March?

Welcome back Anek!
 
Quote from atticus:

The chart examples aren't key reversals. And everything works in hindsight. You've been trading since March?

Welcome back Anek!
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I predicted this market daily downturn on may 2nd and started a thread about it, just as I will predict the next uptrend when the technicals show it to be imminent. Time cycles are the key. ;)
 
Engulfing bar that occurs after many downward bars.

The upward engulfing after a A-B-C correction move is a very solid play.

Atticus, look at this daily chart. Ignore the buy signal to buy the lows the last few days... This move is unlikely to go anywhere, and at most it only has an upside of 1373 before we push to the 1324 area.

The hourly bullish divergence that forms in the 1324 area after the next selloff will be the one to get on board and start trading upward on the 5-15m in a BIG way!
 

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Quote from RangeTrader:

Engulfing bar that occurs after many downward bars.

The upward engulfing after a A-B-C correction move is a very solid play.

Atticus, look at this daily chart. Ignore the buy signal to buy the lows the last few days... This move is unlikely to go anywhere, and at most it only has an upside of 1373 before we push to the 1324 area.

The hourly bullish divergence that forms in the 1324 area after the next selloff will be the one to get on board and start trading upward on the 5-15m in a BIG way!
More...

Anek, I was going by your graphic with the arrows pointing to.... bars that were not engulfing.
 
Quote from RangeTrader:

Arrows... Those are leading indicators. All they mean is "prepare to trade within a few bars".
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Your first chart had GREEN, hand-drawn arrows pointing at non-engulfing "key reversal" bars on the underlying, not the oscillators.
 
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