My whole question is pretty much in the title.
In smaller trends within bigger trends, when they reverse to go back to the bigger trend line, is that called a reversal too?
It is a reversal if a trend stops and becomes the opposite trend. So there has to be an original trend for price to reverse away from. Of course, at the exact turning point, you don’t know yet that a new trend will start - price could go into consolidation or it might go into a wider range or it might just be a minor pull-back from the underlying original trend.
Remember, all these chart patterns we struggle to memorise when starting out in trading are not predictions of what the market WILL do, they are guides as to what YOU COULD do about what the market has done. They are guides to your actions, not the market’s.
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When is a reversal just a pullback???
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When is a pullback part of a reversed reversal???
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I think so
Trend reversal does apply to trends withing trends
To qualify for a trend, the minimum number of point is 4 points.
For example, in a bull trend.
1st point - swing high
2nd point - swing low
3rd point - swing higher high
4th point - swing higher low
When any of the low point is breached. A potential reversal occurred.
When 4 points is formed again. That will be the confirmation of a bear trend.
Now,let’s look at a 1hour chart and find 4 points. label them 1,2,3,4.
Next we zoom in and look at say 1min chart, you may find small trend forming within one swing of the 1hour chart. (eg. point 1 to point 2 of 1 hour chart)
This is just theory, in reality knowing this theory may not help you become profitable.
Why? because the fup-ing trend is quite erratic, choppy most importantly unpredictable.
Most important thing in trading is " Trade what you see. " & " HIT your Target "
It depends on your time frame! Like, you may see a range on daily chart but on M5 you can get so many reversal patterns!
I believe its all a matter of perspective.
A trend to one trader is a correction to the next trader and peanuts to the institutional trader.
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There are three phases of a trend: the breakout, the channel and the trading range. The “smaller” trends you are alluding to are pullback flags in the opposite direction. We see these after the initial breakout. Traders start taking profits and the trend seams to reverse. However, these are flags and should not be considered reversals. In a tight channel, you should only trade in the direction of the trend. The first pullback after a strong breakout is an excellent time to enter in the direction of the trend. You do this by using a trailing stop order 5 pips above (or below) the prior bar. Your entry will only trigger if the price goes in the direction of the trend.
Hope this helps.