The Key Reversal pattern
A Gann pattern every trader has to know…but why?
One of the key elements to trading successfully is to identify a chart pattern. In doing so we then have to know what it means or is indicating for that chart at that moment in time.
Gann recognised many patterns and one he labelled as a ‘Key reversal’. Its simplicity is remarkable but its power in trading is immense. I would not be exaggerating in any way if I stated that every trader must recognise this pattern in any market and in any time frame. It’s just that important.
I have seen many Key reversals, both Buy and Sell. In all charts and even on 1 minute charts right up to monthly and even yearly charts. As a result, knowing this pattern improves your analysis and profitability.
In themselves, they represent a significant clue on the next direction or campaign in a market. But as with all Technical Analysis tools they should be looked at with other clues such as Trend, Support or Resistance etc. because a great trade has several parts.
The AUDUSD Forex chart
Take a look at the AUDUSD Forex daily chart. On this you can see several Key Reversals signalled. The green arrows are Key Reversal Buy signals and the red are Key reversal Sell signals. It should be noted that the first three green Buy signals are finding support on one of Gann’s planetary tools based on planetary cycles of Venus. If you don’t believe planets make for good trading then maybe you have an undeniable clue right here. The next Buy signal is on support of my daily and weekly averages.
Now to a closer review. Let’s look at the third KR Buy signal. It finds support on Gann’s angle and runs up strongly for 4 days. Then the trade is signalled as being over by a red Key Reversal Sell signal.
This pattern forms a major part of Gann’s Mechanical method. However, with the addition of technical tools like Planetary cycles, SQ9, Averages and the like we can profit handsomely from a simple, uncomplicated pattern.
Best wishes to all,