Price Bar Reversals (7 of 9) - The Key Reversal

[AshishPatel24]

Is there a difference between engulfing and a key reversal, does a key reversal have to have a higher high ?

[YourTradingCoach]

@AshishPatel24

Part 1 of response (due to 500 character limit):

Price Bar Reversal Patterns are a different 'body of knowledge' to the Candlestick Patterns. However in some cases they are VERY similar. After all, they're both trying to identify a shift in sentiment within the same price action. The fact that they both come to largely the same conclusion is a good sign.

[YourTradingCoach]

@AshishPatel24

Part 2:

This is one of the cases that are very similar, although not identical. Often you'll find price action that meets the definition for both.

Where's the difference? The key reversal does require a higher high and a lower low. This is not essential with an engulfing pattern, as these patterns are concerned with the real body of the candle (open to close). For an engulfing candle, the body must engulf the previous candle's body.

[YourTradingCoach]

@AshishPatel24

Part 3:

For a key reversal, the high-low range must engulf the previous candle's range while also having (for a top reversal) the open above the previous close and the close below the previous low).

It sometimes helps to draw them both to be able to see the subtle difference.

In trading the patterns though, they both represent essentially the same thing... a dramatic short-term reversal of sentiment.

[YourTradingCoach]

@AshishPatel24

Part 4:

Given the 500 character limit for these YouTube comments, it might be better if you contact me via my website & email.