Does anyone use any criteria to define a reversal over a retrace? Is it even possible to do with any degree of accuracy?
I could think of a couple of ways, such as: crossing a major SR line or a higher time frame candlestick color changing and maintaining for a certain threshold, but still very subjective.
support and resistance zones are probably the best indicator along with trendlines. If a candle opens after breaking a trendline (especially on the H4) then to me it is a bona fide break out. Lower highes and lower lows on an up trend or higher highs and lower lows on a down trend. Also I look when the “waves” are looking more rounded off that to me is a sign that a trend is losing steam and I would look for a long wick candle on at least 1H timeframe. Finally you can also see momentum if you watch how quick price moves one way or another you can get the idea of when a trend is over. Also at major s/r levels or at key points in the day you can notice price going agains the trend and that is most likely people taking profits and not really a reversal. so you need to be careful. I live in east coast and every day between 2:30 -3:30 price seems to have a little movement and it is very tradable but many times it is counter trend so you have to be very careful.