What are some signs that a reversal is coming on forex marketing?
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MACD histogram bars. RSI movement above or below 50. PSAR balls. Lower chart price action. Adverse price movement at support and resistance zones.
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You read this lesson?
Divergences, Overbought/Oversold, Head & Shoulders pattern, etc.
Tip: You should combine signals from several indicators before concluding a reversal.
Get into the right attitude towards TA.
TA can not tell you what the market will do. But it can tell you what you should do. Such as if you enter in a certain direction at a certain price level and after a certain type of price action, your position will probably be good for you. You will know when you are putting this theory into action when you stop saying, “Price is here, I must hit Sell now before its too late!” and start saying, “I will set a Sell order here, so that if price goes there, the order will get me a short position”.
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There’s a section here called marketmilk it has many indicators that kind of say when something maaaay be due for a reversal! It’s usually timing though so sometimes it’s delayed.
You can also learn from here, just choose your pair and take a look under Candlestick Patterns
Traders scan their indicators and trawl over what the great traders have said about seeing reversal signs - but still there’s no Holy Grail.
Another way is to look at what the great traders of the last 50 years did not say. The fact that the great Larry Williams had to formulate the Smash Day Strategy, a reversal strategy which recognises no clues about imminent reversals, does seem to suggest that even Larry couldn’t see when a reversal was coming until after the event.
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reversal normally comes when you just about to tp but haven’t
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I would add that reversal signs are pretty good signals to exit on, but not good to enter on.
Added to which the forex markets are so often not strongly and consistently trending that there is a reversal of some sort on every pair every 7 days. This flatters the apparent performance of reversal signals.
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Double Tops and Double Bottoms: Double tops occur when the price reaches a peak twice at approximately the same level before reversing downward.
I’m always worried that these discussions on trend reversal patterns ignore the key point.
Are we talking about reversals out of a trend and into the opposite trend, or reversal out of weakness into the underlying existing trend?
By price action, there are lot of signs ranging from candlestick formations to patterns, volatility and price level etc
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Great! your points are amazing man.
Some indicators may hint you on the upcoming price reversal. But usually traders orientate on the patterns such as flags, for instance.
Each trader devises his own strategy how to define the future price reversal, sometimes it’s enough to look at the volumes in the order book, and if you have an opened bearish position, and you are noticing that there’s a huge volume on buying the assets, then it may indicate a trend reversal, but it is also dependable.
There’s myriad of them, and I guess it’s difficult to count them up.
The very first thing falling under the attention of a rookie trader - patterns. Flags, double tops/bottoms, triangles - all of them signalize the upcoming trend reversal, but it also depends on the global trend. The price may deploy, but for a very short period, and if the position size isn’t big, then you won’t warn significant yield.
There are many parameters to consider when it comes to trend reversals.
- Rejection from a resistance or support
- Chart pattern head and shoulder formation
- Candlestick patterns; evening/morning star, engulfing pattern
Market Structure will show signs of a reversal before indicators catch up.
If price is reversing from a downtrend to an uptrend, price will stop making lower highs and lower lows and begin making higher lows and higher highs.
Market Structure is far more reliable than indicators.
Indicators may show signs of reversal that are actually a consolidation and by time indicators catch up the reversal is well underway.
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Look at the candlestick patterns and when a trader roams in a range it is more likely to break the range.
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The only sure way to know would be to physically see the order book with the buy and sell orders and the aggressive bid and ask buying and selling.
Any other method is just by chance you might pick a reversal.
The most probable indicator is news of a change in a central bank policy.
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