Downside Key Reversals
Comment of the Day

August 02 2019

Commentary by Eoin Treacy

Downside Key Reversals

Eoin Treacy's view

A downside key day reversal is defined by a move to a new intraday high which is subsequently reversed, so that the market closes at a low below that of the previous day. The key characteristic of the key reversal is size. In order for the signal to have an emotional impact on the market it needs to stand out on the chart so anyone looking at it concludes something big happened on that date. Weekly key reversals are often more important to investor psychology but the size rule is equally important. Downside follow through on the signal in the following days of week is a confirmatory sign of a change of direction.

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