Key Reversal Indicator

The Key Reversal Indicator for is a forex trading tool for tracking market trends. When trend reversals tend to occur, this signal indicator tries to detect them. This indicator is an automated technical tool which automatically analyzes the market’s continually changing price dynamics, compares the data to previous history, and generates a trading signal.

What is the Key Reversal Indicator?

The Key Reversal Indicator generates arrow-based forex trend trading signals. The indicator operates on the basis of zigzag reversal patterns. The indicator is useful for swing traders because of its ability to identify peaks and bottoms. It does, however, work well for intraday trading on lower time frame charts. Furthermore, both novice and expert traders like the indicator’s simplicity and functionality. By increasing the indicator parameter’s Depth value, the indicator can calculate a larger region. A bigger deviation value, similarly, ignores minor price swings. The Key indicator can be used in conjunction with other trend trading tools and technical tactics by trend traders.

Setting up the Key Reversal Indicator
Setting up the Key Reversal Indicator

Key Reversal Strategy

When used on charts, the indicator continually scans the bars for highs and lows. If it discovers a new high or low based on the values of the indicator parameters, it establishes a pivot point. A signal arrow is placed on a candle or bar to indicate a trend reversal from bullish to bearish and vice versa. As soon as the indicator shows an UP arrow, the trader can place a BUY order. An open order can be held by a trader until the indicator suggests a trend reversal with an arrow pointing in the opposite direction. As a result, the indicator enables the trader to follow the entire trend. The preceding swing low could be a good location to place a stop loss. Similarly, the following reversal arrow could be a good place to take profit. Traders may, however, choose to take profits with a suitable risk/reward ratio. For a SELL indication, the entire process is reversed.

Buy Signal

The following could be your checklist for a buy trade:

  • When the trend of the asset is bullish.
  • When a blue up arrow appears below the candlesticks.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when a red down arrow appears above the candlesticks.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Key Reversal Indicator Buy Setup
Key Reversal Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the trend of the asset is bearish.
  • When a red down arrow appears above the candlesticks.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when a blue up arrow appears below the candlesticks.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Key Reversal Indicator Sell Setup
Key Reversal Indicator Sell Setup

Key Reversal Pros & Cons

Pros

  • The Key Reversal Indicator helps the trader predict possible reversal zones in a trending market.
  • This indicator could serve as a good confluence tool for traders in addition to price action.

Cons

  • The Key Reversal Indicator, with the aid of the signal arrows, may sometimes identify a trend correction as a trend reversal.
  • The determination of highs and lows takes time. As a result, entry and exit signals may be delayed.

Conclusion

The Key Reversal Indicator may assist traders in detecting and capitalizing on trend reversals as they occur. The indicator is also chart friendly and does not clog up your chart. This indicator can be used with any forex trading system or strategy to confirm trading entries or exits.

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