Beginner's Guide For Traders About Spotting Trend Reversals ?
Spotting Trending Reversals ?
Knowing how to spot a trend reversal is important in trading.
Finding trend reversal trades are the most profitable and it cannot be argued. It’s a fact, there is no larger space of price action than a trend!
The first way you can spot a change in trend is by spotting a change in flow of higher highs and higher lows into lower highs and lower lows. This is shown in the image above.
Another way to spot a change in trend is by looking for major structures. The most common, which cause change in trends, are support and resistance zones, breakout of trend-lines and channels.
The Three Inside Up Candlestick Patterns are reversal patterns that occur at the bottom of down trends. The first candle should be found at the bottom of a downtrend and is characterized by a long bearish candlestick. The second candle should at least make it up all the way up to the midpoint of the first candle. The third candlestick needs to close above the first candle s high to confirm that buyers have overpowered the strength of the downtrend.
The Three Inside Down candle stick pattern is also a great way to spot reversals!!
Three Inside Down Candlestick Pattern three inside down candlestick pattern is found at the top of uptrends and they suggest a bearish reversal. the first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick. The second candle should make it up all the way down the midpoint of the first candle. The third candlestick needs to close below the first candle to confirm that sellers have overpowered the strength of the uptrend.
Taking a counter based trade on just one of these confluence is NOT a very good idea at all. If let’s say you get 2-4 of these confluences it would be a good idea to look for a trade entry.!
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