Trading Counter-Trend with Closing Price Reversal (CPR)

What Is CPR?

CPR (Closing Price Reversal) is a counter-trend candlestick pattern based on the relationship between the current candle's close and the prior candle's extremes. Unlike a simple engulfing pattern that only compares bodies, a true CPR requires the close to exceed the prior high or low, showing that the opposing side has absorbed the initial move and invalidated the whole prior range.

How to Identify CPR

Two main types:

• Bullish CPR: the current candle makes a lower low than the previous candle (Low(n) < Low(n-1)) but closes above the previous high (Close(n) > High(n-1)). This often follows a liquidity sweep beneath a swing low. [diagram:engulfing-bullish]
• Bearish CPR: the current candle trades above the previous high (High(n) > High(n-1)) but closes below the previous low (Close(n) < Low(n-1)). The new high is a liquidity trap, and sellers reclaim the market.

How to Trade CPR with SMC

• Identify the higher-timeframe trend and PD arrays: order blocks, supply/demand, FVG, premium/discount zones.
• Wait for CPR at a high-probability location: discount for bullish CPR, premium for bearish CPR, near structural swing points.
• Treat the extreme of the CPR candle as a liquidity grab; wait for a break of structure (CHoCH) to confirm the reversal.
• Enter on a retest of the newly created FVG, breaker block, or order block.
• Place the stop beyond the CPR extreme (above high for bearish, below low for bullish) plus buffer.
• Target the opposite liquidity pool, equal highs/lows, or the next PD array.

Real Example

In a EURUSD H1 downtrend, price reaches the discount zone and sweeps the Asian low. A bullish CPR candle forms: it prints a lower low but closes above the previous H1 high. After the close, price breaks the bearish structure (CHoCH), then returns to an FVG created after the CPR. A long entry at the FVG with a stop below the CPR low targets the liquidity above.

Common Mistakes

• Trading CPR in the middle of a range without any supply/demand context.
• Entering immediately at the close instead of waiting for a retest confirmation.
• Using a stop that is too tight and inside the CPR candle; wicks often get swept first.
• Confusing CPR with regular engulfing and ignoring the close location relative to prior extremes.