How to find out Trend Reversal?

Trading Discussion
1

Hi Traders,

How to find out Trend Reversal? How can I identify a trend is finished and It will turn reverse.

What is the best method to find out that?

Thanks!

2

Hi,
There are two tipes of reversals: the V-reversal and U-reversal.
V-reversal is a quick bacward movement with the confirmation in volume. The U-reversal is slow reversal when the price meets large player.
In ane case, you can apply the basic definition from of trend theory.

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3

I suggest your words and maybe your trade planning needs to be more precise.

I talk only re long-term trend-following.

Firstly, most long-term trends don’t reverse as such - so most uptrends do not quickly reverse and form downtrends as their next chart pattern, vice versa for downtrends.

The most common thing a trend does next is continue - that’s how the trend formed in the first place - but a percentage either pull back hard before they continue or they go into a range before they continue. These are the most common dangers when you are in a trend, not trend reversal.

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4

There is some candle stick pattern that you can use as reversal sign. Such as: morning star (bullish reversal), shooting star (bearish reversal).

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5

Where can I find that Volume?

6

Thanks for your valuable comment :slight_smile:

7

First thing I do is think about why there is a trend in a particular direction - what’s causing it, what is the driver.

If it is the case that the driver is simply because it’s the trend, i.e. because the price has been going say up, so it will continue up - then I’d watch price behavior, the reversal will be sudden and quick (perhaps like the tech bubble).

But if there is an economic driver then I’d watch the news, the reversal of trend could be slower.

Of course trend is always viewed within a time frame, one tf’s reversal is another tf’s pullback.

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8

What this video bro YouTube

It must help

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9

Good concise video alexandra. Seen David Jones before but I think I will watch a few more of his titles. Thank you.

Trend TA really is as simple as he makes out. I have an issue with trendlines in that I have found many times I would draw them in different places on the same chart so I tend to use MA’s and swing highs/lows. But the aim and the job they’re doing is exactly the same.

10

In this case I am 100% agree with you.

11

it’s all about probabilities

there isn’t a reliable way of knowing that a trend (within a given time frame) WILL reverse

there are many methods of assessing the probability that it HAS just reversed, i.e. that an apparent change of direction is more likely to continue than it is to reverse back again

the important thing to understand is that the more reliable methods of telling this involving judging localized areas of support and resistance and are not connected with any kind of indicators at all

the best method i’ve ever found is a thing called “1-2-3 formations”

quite a lot has been written about it, including a couple of chapters in books by Joe Ross

there are also some PDF’s you can download about 1-2-3 formations, but one or two of them, unfortunately, (including especially the well known one by someone called Victor Sperandeo), are horribly bad and mostly wrong

like everything else, when you’re trying to learn, the most important thing is where you get the information from, that answers your questions

if you want to find something online, rather than buying a book, i’d look for the PDF by someone called Mark Crisp

i think it’s free, and it’s a pretty good starting point, for this important and helpful subject

you can’t

spot forex doesn’t have “volume”

some brokers pretend that it does, but the volume figures and charts they have are only their own volumes, and that has nothing to do with the real market at all

if you’re trading spot forex, rather than forex futures, you probably need to forget about volume, because it would be a huge misuse of your time and effort to get bogged down in something as unhelpful as that

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12

I use candlesticks. A candlestick formation on the largest time-frames (the weekly and the monthly ones) indicating a new move in the opposite direction is often a decent signal for a likely trend reversal.

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13

Thanks a lot for your time!

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