Reversal Gap

Reversal gap is a signal that is formed in a bottom pivot or a top pivot.

Reversal gap in a bottom pivot means:
1. that today's closing price is in the upper 50 % of the bar
2. that today's closing price is higher than the closing prices during the previous two days
3. that the lowest price during the day is higher than the previous day's highest price

Reversal gap in a top pivot means:
1. that today's closing price is in the lower 50% of the bar
2. that today's closing price is lower than the closing prices during the previous two days
3. that the highest price during the day is lower than the previous day's lowest price

A stop-loss for a reversal gap signal is placed on the lowest value for the previous bar when there has been a buy signal and on the highest value in the previous bar when there has been sell signal. A buy signal for reversal gap in a bottom pivot is given the next day if the highest level in the reversal gap bar is passed. A sell signal for reversal gap in a top pivot is given the next day if the lowest level of the reversal gap bar is passed. When you act on reversal gap signals, decisions are always taken in the direction of the trend. Reversal gap signals is triggered in recoils in the dominant trend.