4# Key Revesal Bar Trading System
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A bullish Key Reversal is a price bar that makes a new low for the current downtrend but closes above the previous bar's close; a bearish Key Reversal makes a new high for the current uptrend but closes below the previous bar's close. In both cases, the market rejects the excursions into new extreme territory and suggests that the trend — at least for the short-term — has reversed.
Very clearly the two examples in the center of the chart were excellent. However, the other two examples failed miserably. Is there any filter we can add to make this type of trade safer? Yes with The Stocastich oscillator.
Time Frame 4H, daily and Weekly
Stochatic (14, 3, 3)
Long and Short Entries
b) After a bearish Key Reversal with the Slow Stochastic in overbought territory, sell short at the lowest low of the last four bars minus one point.
Long and Short Exits
a) Exit a long position at the EntryBar Stop LX, the Trailing Stop LX, or the Profit Target Stop LX.
b) Exit a short position at the EntryBar Stop SX, the Trailing Stop SX, or the Target Profit Stop SX.