As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%	Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

As of 02/21/2025   Indus: 43,428 -748.63 -1.7%     Trans: 16,034 -430.64 -2.6%     Utils: 1,023 +3.75 +0.4%     Nasdaq: 19,524 -438.35 -2.2%     S&P 500: 6,013 -104.39 -1.7%	YTD  +2.1%    +0.9%    +4.1%    +1.1%    +2.2%
Targets    Overview: 02/13/2025     42,500 or 45,000 by 03/01/2025   16,900 or 15,800 by 03/01/2025   1,050 or 970 by 03/01/2025   19,200 or 20,500 by 03/01/2025   5,875 or 6,200 by 03/01/2025
Chart Pattern Indicator: on 2/19/25

Bulkowski on Bearish Key Reversal Bar, v2

Initial release on 2/5/2025.

This article discusses the bearish key reversal bar chart pattern, including what to look for and how it behaves in stocks and exchange traded funds (it is absent in cryptocurrency).

Bearish Key Reversal Bar: Overview

The bearish key reversal bar is supposed to be bearish and it is by one measure (breakout direction). Stocks showing the pattern broke out downward 78% of the time. That's no surprise because the close is near the bottom of the tall pattern.

However, in 1,638 stock trades where the pattern broke out downward, the average trade lost $96.17 (in a bull market). In exchange traded funds, the 731 trades with downward breakouts from the key reversal lost an average of $76.51.

These numbers suggest the bearish pattern isn't that bearish. The remainder of this article focuses on upward breakouts from the bearish key reversal bar chart pattern.

Bearish Key Reversal Bar: Identification Guidelines

The following table shows the identification rules.

Look at the figure for an example. The bearish key reversal bar pattern is line BC, a one price bar pattern. The reversal occurs in a short-term uptrend (A). What is short term? Five days is what I used to determine the trend. Often you can eyeball this trend, but I used linear regression (which computes the slope of a line such that the distance from each point to the line is a minimum).

Price should open much higher (B), but close near or below the prior day's close (C versus A). In short, that means it's a tall price bar that swings an uptrend to down (B to C).

Bearish Key Reversal Bar: Target Exit, Stock Performance

Trading using a target exit is simple to explain. Look at the adjacent stock chart.

I highlighted the key reversal bar pattern in the box. The reversal is a one-bar pattern that is tall, opens well above the prior close, but closes near or below the prior close. It is supposed to act as a reversal of the uptrend.

In this example, price continued rising (because I only looked at upward breakouts).

I placed a buy stop a penny above the top of the pattern (horizontal green line), and a stop loss order a penny below the bottom of the pattern. The target exit was twice the height of the reversal bar added to the price of the top of it.

In this example, the buy stop triggered for an entry and the stock sold when it climbed to the target exit price.

Testing

As explained in the example above, a buy signal happened when the stock climbed a penny or more above the top of the pattern (that is, I placed a buy stop a penny above the price bar in the pattern). I set an order to sell at a price twice as high as the height of the key reversal added to the high price in the pattern. I placed a stop loss a penny below the bottom of the pattern to help limit losses (by catching a dropping stock automatically).

The tables shows results for bull markets with upward breakouts (only) and an upward inbound price trend. I found the pattern in 471 stocks (but more in the benchmark). For additional testing methodology details, click the link.

We have a winner! The pattern almost triples ($91.56 versus $32.55) the benchmark performance from 1990 to 2025 but trades were comparatively few. The pattern is somewhat rare, meaning I didn't have to limit the data to prevent overflowing my spreadsheet, like I had to do with other patterns.

Bearish Key Reversal Bar: Target Exit, ETF Performance

I used the same method to test the key reversal bar in exchange traded funds (ETFs) as I did in stocks. The chart shows an example trade that failed.

A buy stop triggered more than a week after the pattern ended. The ETF climbed for another week before plunging and reaching the stop loss order for a loss.

Testing

This is the same test as the prior one except I used 94 exchange traded funds (ETFs) instead of common stocks.

The key reversal appears substantially less often in ETFs than in stocks, especially when compared to the benchmark (308 versus 6,095). Those that do appear don't perform well, either. The average trade makes $4.64 versus the benchmark $38.39.

I don't recommend trading this in ETFs and wonder if the glorious performance in stocks can live up to the theoretical results. Why? Because it does so well in stocks but flops in ETFs. That's unusual and it suggests the potential of under-performance (in stocks).

Bearish Key Reversal Bar: Target Exit, Crypto Performance

I found only one trade in the dozens of cryptocurrency files I looked at. That's too few to remark on.

-- Thomas Bulkowski

See Also

• Key reversal, uptrend
• Key reversal, downtrend
• How did I test small patterns in stocks, ETFs, and crypto currency?
• Small pattern performance.
• Updated daily list of short patterns.

Other1-bar patterns

• Closing price reversal, uptrend
• Closing price reversal, downtrend
• Bullish key reversal bar, v2
• One-day reversal top
• One-day reversal bottom
• Wide ranging day downside reversal
• Wide ranging day upward reversal