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"key" reversal on the SPX weekly chart.


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#1 The End

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Posted 26 January 2007 - 05:47 PM

Posted Image

Barrowed from Sudacas' post at:
http://www.capitalst...p...c=8212&st=0

Edited by The End, 26 January 2007 - 05:48 PM.

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#2 NAV

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Posted 26 January 2007 - 05:53 PM

The eye sees what it want's to see. But the facts are different. The last Key reversal week on SPX was on 9/4/2006. We rallied 140 points from there. Just stating the facts, not any opinions.

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#3 The End

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Posted 26 January 2007 - 05:59 PM

There is no key reversal that week. There have been some daily key reversals that have pointed to a top that have not worked. The last weekly key reversal was in May (circled). In order to be called a key reversal you must close below the lowest low of the previous day or in this case, week.
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#4 dcengr

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Posted 26 January 2007 - 06:02 PM

There is no key reversal that week. There have been some daily key reversals that have pointed to a top that have not worked. The last weekly key reversal was in May (circled). In order to be called a key reversal you must close below the lowest low of the previous day or in this case, week.


I could probably find out myself but...

This key reversal method on the weekly.. how predictive is it when its back tested? In other words, if there's a key reversal by that definition where the close of the next week is below the previous week, how many times has there been a following week where prices were lower than the open?

If you have experience with it, I would appreciate knowing it. If not, then I can probably whip up a code quick to see how good it works.. if that was the only rule to follow.
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#5 paulstan

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Posted 26 January 2007 - 06:05 PM

Any backtest of the efficacy of a key reversal should also include some filter for when the key reversal comes at a point where the market has just tested multi-month highs and had a high daily RSI. I suspect the key reversals under those circumstances have remarkably different expected outcomes than the run-of-the-mill "key reversal."

#6 The End

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Posted 26 January 2007 - 06:09 PM

It's rare. That is why they call them "KEY" The Definition of a key reversal is that you make a high or low for the move (in this case, a multi year high) and then take out and CLOSE below or above the previous periods high or low. The only ones on the weekly period are circled. They happen twice or three times a year on a daily chart but much less often (normaly) on a weekly.
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#7 dcengr

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Posted 26 January 2007 - 06:12 PM

It's rare. That is why they call them "KEY"

The Definition of a key reversal is that you make a high or low for the move (in this case, a multi year high) and then take out and CLOSE below or above the previous periods high or low.

The only ones on the weekly period are circled. They happen twice or three times a year on a daily chart but much less often (normaly) on a weekly.


Ok that and paulstan's observation gives me a bit more to work with.

I'll see what I can whip up. I've got dow data going back to 1900s, so it would be interesting to see how such simple rules may shape up.

Sometimes, the results are surprisingly good, like the RSI5 signals.
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#8 The End

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Posted 26 January 2007 - 06:14 PM

I think you will be pleasently surprised. Look for both bottoming and topping. Cheers
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#9 NAV

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Posted 26 January 2007 - 06:24 PM

There is no key reversal that week. There have been some daily key reversals that have pointed to a top that have not worked. The last weekly key reversal was in May (circled). In order to be called a key reversal you must close below the lowest low of the previous day or in this case, week.


Sorry, you are right. That was just an outside reversal, not a key reversal week.

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#10 The End

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Posted 26 January 2007 - 06:27 PM

No problem. :)
NONE of what I type should be taken as financial advice.