TRADER’S CLASSROOM BY JEFFREY KENNEDY

How to Spot High-Confidence Trade Setups in a Highly Volatile Market —

Part 3
Market: FB, E-min S&P, Crude Oil, and Bonds Thursday, March 12, 2020

In today’s episode, we’re going to review another technique that we know works — the double close key reversal
outside bar.

A bearish key reversal forms when prices make a new high above the prior bar’s high and then close below the
prior bar’s close. A bullish key reversal is just the opposite. A bearish double close key reversal occurs when
prices make a new high above the prior bar’s high and then close below the prior two closes. Of course, the bull-
ish version of this bar pattern is just the opposite.

So where and how does the outside bar part of the equation come into play. Well, an outside bar happens when
the high and low of the current bar is above and below the prior bar’s high and low. For those of you who are
candlestick enthusiast, don’t confuse a bearish or bullish engulfing pattern with an outside bar…two different
languages.

Once we add these two key components together, we come up with a double close key reversal outside bar. For
such a seemingly simple bar pattern, it’s an important one. For example, it we go back in time a bit to May 2008,
look what formed…a double close key reversal. Moreover, look what started all this craziness back in February —
a double close key reversal outside bar!

As I began this week’s series of lessons on how to spot high-confidence trade setups in a highly volatile market,
I made mention that there were several different ways to do so. The first approach is to simply stand aside until
things calm down; secondly, shorten your time frame and horizon. My final recommendation is to continue to rely
on the tools and techniques that we know work, and these tools and techniques are what we continue to discuss
and review in Trader’s Classroom each week.

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770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International
Notes:

PO Box 1618 • Gainesville, GA 30503 USA customercare@elliottwave.com

770-536-0309 • 800-336-1618 • FAX 770-536-2514 © 2020 Elliott Wave International