Concept
Key Reversal
Key Reversal is a Chart & Candlestick Patterns concept. The Library holds 3 implementations, each one a working definition you can pull into Quant.
Top Key Reversal indicators
3 total
What is a Key Reversal?
A key reversal is a single-bar failure at a trend extreme. In the bearish form, price pushes (often gaps) to a new high above the prior bar's high, then sells off to close below the prior bar's close, or below the prior bar's low in strict definitions. The bullish mirror makes a new low and closes back above. It is the 'one-day reversal' of classic charting literature: the market accepts new extremes intraday and rejects them by the close, leaving everyone who chased the push underwater.
The strict form (a new extreme plus a close beyond the prior bar's opposite side) is also an outside bar, and the logic overlaps with a swing failure pattern: a probe beyond a reference extreme that closes back through it. Classic descriptions add climactic volume as a qualifier. Single bars fail routinely, so the pattern reads best as a warning at an extreme rather than proof of a turn.
How traders use it
- As an exhaustion alert in an extended trend: a key reversal after a sustained run is a common cue to take partial profits or tighten a trailing stop, ahead of any actual reversal entry.
- As a fade trigger with confirmation: entry on a break of the key reversal bar's opposite extreme, stop beyond the new high or low it printed, accepting that many such bars only pause the trend.
- On higher timeframes: weekly and monthly key reversals are watched as candidates for durable swing highs and lows, particularly when they print on a volume spike.
Related concepts · Reversal chart patterns
Concept family
Chart & Candlestick Patterns
84 concepts mapped · 46 in the Library
Key Reversal FAQ
What is the difference between a key reversal and an outside bar?
An outside bar only requires engulfing the prior bar's range. A key reversal requires trend context and sequence: a push to a new extreme of the move first, then a close back beyond the prior bar's close or low. Strict key reversals are therefore a subset of outside bars, while a random outside bar mid-range carries none of the same exhaustion logic.
Does a key reversal need high volume to count?
Most classic definitions emphasize unusually heavy volume, because the pattern is meant to capture a climax: maximum effort at the extreme producing no held progress. Bar geometry alone still qualifies under looser definitions, but a key reversal on quiet volume is weaker evidence, and many traders skip those or demand follow-through on the next bar.
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