Stochastic is the tool that tells you when a trend may be reaching oversold or overbought and hence loosing momentum and strength.
It’s true that experience will let you know this better. Practicing more will help you to gain more experience.
Great semantics here- emphasis on the word MAY. Stochs are great at ID’ing OS/OB levels, but, the indicator can also get pinned, or embedded, in OS/OB territory for an extended period of time which is a contrarian sign (e.g. immense strength).
True, often that will happen after the market has been pushed by extreme buying or selling on the back of some type of news. Be it an economic data release or some major geopolitical news. When such news events happen is not time to use stochastics. It only comes into play when no news is happening.
This is the power of analysis that comes with experience. Otherwise - in no way.
In order to make a wise decision, it is very important for an investor to study the market structure, which comprises some indicators namely, Bull v/s Bear & price action analysis & rejected reversals that will show you the uprising or declining momentum.
I think the ability to anticipate such steps comes only with experience working with Forex.
The most straightforward answer to “when is a trend over” is when the high / low that printed the most recent high / low has been breached. There are nuances, but, this is one of the most basic principles of price action analysis. Sticking to this will save your butt more often than not.
Noted and thanks
Thats great insight there. You are a pricrle action trader?
Price action strategy is the best way of finding out if a trend is losing strength or not.
Thanks for the great explanation.
it’s depends on the situation sometimes which will tell u the the indicator to use. Losing in strength brings either correction or reversal . I use dynamic as ma main indicator that spot reversal and correction, but it’s not very effective in ranging market so something like breakout in channel is effective here sometimes. Chart patterns are very useful too. Though I said I use dynamic resistance and support as ma main but when I see chart patterns indicating reversal or correction I ignore other Indicators sometimes. It also depends on which type of trader u are and the situation of the price movements. Other Indicators like fib and divergence patterns are also good ones too. As long as u understand the price situation and direction, u will know what is best to use. Also, let the price control u don’t try to control the price, lol
markets going to slow and make other side turn you can focuse on 1 minte time frame
You can use a trendline to see whether a trend is ending or not. Specifically, take a look at the breakout of the trendlines. If you draw a falling trend line in a downtrend and if price breaks it and closes above it, it is a sign that a trend is losing strength.
What do you mean by stopping volumes?
for bullish trend: seeing more red candles and divergence
The direction of the ADX line is important for reading trend strength. When the ADX line is rising, the trend strength is increasing, and the price moves in the direction of the trend. When the line is falling, the trend strength is decreasing, and the price enters a period of retracement or consolidation.
Very well put kmiec, and I totally agree. Use ADX.
Hi, there is no definite way to confirm the reversal/retracement, the market just do what it does. Fib retracement or whatever indicator is just an edge to increase the odd. Set stop loss and finish read book “trading in the zone”.