Key Reversal
The key reversal does not occur very often but is very reliable when it does.
After an up-trend:
- The Open must be above yesterday's Close,
- The day must make a new High, and
- The Close must be below yesterday's Low.
After a down-trend:
- The Open must be below yesterday's Close,
- The day must make a new Low, and
- The Close must be above yesterday's High.
Remember:
The signals are most reliable if they occur after a strong trend. If the trend is weak, so is the signal.
Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.