Reversal Amount

AAA

DEFINITION of 'Reversal Amount'

The amount of price movement required to shift a chart to the right. This condition is used on charts that only take into consideration price movement instead of both price and time.

INVESTOPEDIA EXPLAINS 'Reversal Amount'

In the context of point and figure (P&F) charts, the reversal amount is the number of boxes (an X or an O) required to cause a reversal. A reversal would be represented by a movement to the next column and a change of direction. If you increase the reversal amount, you will remove columns corresponding to less significant trends and make it easier to detect long-term trends. In terms of Kagi charts, it is the amount (generally around 4%) needed to change the direction of the vertical lines.

RELATED TERMS
  1. Inclusion Amount

    An additional amount of income that a taxpayer may have to report ...
  2. Point & Figure Chart

    A chart that plots day-to-day price movements without taking ...
  3. Box Size

    The minimum price change that must occur before the next mark ...
  4. Reversal

    A change in the direction of a price trend. On a price chart, ...
  5. Kagi Chart

    A type of chart developed by the Japanese in the 1870s that uses ...
  6. Count

    A type of technical analysis that uses point and figure charts ...
Related Articles
  1. Active Trading

    Point And Figure Charting Basics

    Learn how to construct and read these price charts designed to highlight entry and exit points for longer-term positions.
  2. Forex Education

    Spotting Trend Reversals With MACD

    Knowing when trends are about to reverse is tricky business, but the MACD can help.
  3. Technical Indicators

    Why is the 200 Simple Moving Average (SMA) so common for traders and analysts?

    Learn about the 200 simple moving average (SMA), how it is utilized by traders and analysts, and why it is considered to represent major support or resistance.
  4. Trading Strategies

    How do I build a profitable strategy when spotting a Three White Soldiers pattern?

    Learn a simple trading strategy implemented based on the bullish market reversal signal given by the three white soldiers candlestick pattern.
  5. Trading Strategies

    How are Three Black Crows patterns interpreted by analysts and traders?

    Understand the basics of the three black crows pattern and how analysts and traders interpret this bearish reversal pattern when creating a trading strategy.
  6. Trading Strategies

    How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented when the pattern is identified.
  7. Forex Strategies

    How do I implement a forex strategy when spotting a Rounding Bottom Pattern?

    Understand the key factors to implementing a profitable forex trading strategy based on recognizing the formation of a rounding bottom pattern.
  8. Trading Strategies

    How are Stick Sandwich patterns interpreted by analysts and traders?

    Understand the basics of the stick sandwich candlestick pattern and how this reversal signal is interpreted by analysts and traders.
  9. Trading Strategies

    How effective is creating trade entries after spotting a Three Black Crows pattern?

    Understand the basics of the three black crows candlestick pattern and how this reversal signal is used for the creation of effective trade strategy.
  10. Trading Strategies

    Spot Chances For Profits In The Three-Step Cycle

    Markets progress from one price level to the next through an action-reaction-resolution cycle that generates all sorts of profitable trading opportunities.

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center