In any market or economic statistic, there is some point, if crossed, which marks the beginning of a change in trend. These specific price levels exist in all time series and might be thought of as key pressure points. They reflect the invisible inflection point related to entropy. When the reversal points are elected, they provide a buy or sell signal for the investor. This system provides precise trading targets, which will manifest themselves into buy or sell signals.
Reversals Points offer areas of key support and resistance within any market or economic statistic. They are the primary pressure points within the price activity.
Reversal Points are generated each time a market or economic statistic produces a new isolated high or low, either on an intraday or closing basis. Reversals Points are classified into three categories; Major, Intermediate or Minor depending upon the importance of the particular high or low.
Reversals that are generated from highs or lows are also differentiated into “Bullish” or “Bearish” reversals.
Each high or low generates four separate reversal points; Immediate, Short, Intermediate, and Long-Term. An important shift in the market’s trend will only occur when all four of the reversal points have been elected.
Sometimes two or more of the reversal points generated from the high or low would be the same number or be separated by a single basis point. When the election of these types of reversals occur it signals an abrupt change in trend. These reversals are known as Double, Triple or Quadruple reversal points:
The "election" of a reversal point is achieved only on a closing basis.
A Reversal Gap is the void between two reversal points. Whenever large gaps form between reversal points, sharp swings become possible as the market moves from one side of the GAP to the other leading to a higher degree of panic.
When reversal points are evenly dispersed, there are a greater number of support and resistance levels to penetrate. This requires more energy within the system to create a panic situation. But when Reversals are clustered together in particular areas leaving GAPS between them, then price movement can become much more abrupt.