Forex Trading Technique - Key Reversal Bar

Reversal bars have a heirachy of significance. The most common type of reversal bar to occur in every time frame is the plain vanilla reversal bar, which we covered in an earlier post. A little higher on the food chain is the Key Reversal Bar. The fundamental concept is the same. Prices make a new swing high (or low) and then close beyond the range of the open and the prior day’s close.

Just from looking at the bars on the left side of the graphic you can tell what happened during this time frame. The market opened lower than yesterday’s close but buyers came into the market and took prices to a new swing high. We cannot tell from the bar but either buying dried up or sellers came into the market and overwhelmed the buyers. Price closed lower than the today’s open and yesterday’s close. We would look for a Bearish Reversal or change in trend on this bar.