Reversal trading strategy. There are a lot of reversal strategies, but there is one that I really like, and that is the Strong Trend Reversal Strategy. It works on any time frame and in all markets I trade (stocks, forex, futures). The strategy combines the concepts of trends and velocity/magnitude, which are key ingredients for analyzing.

Reversal trading strategy

2015 06 17 Momentum and Reversal Day Trading Strategies for Beginners

Reversal trading strategy. What is it? To start I needs to assume that you know what is the support and Resistance in Forex trading. If not see few simple definitions and examples below. Support and Resistance are psychological levels which price has difficulties to break. Many reversals of trend will occur on these levels. When a.

Reversal trading strategy


One of the most powerful ways to use price action trading strategies is as reversal signals in a market. Price action signals can often tip a trader off to an impending reversal change of direction in price. These price action reversal strategies often provide accurate entries into a trending market, range-bound market or even counter-trend, and they also often provide good risk to reward potential.

Often, traders mistake a normal retrace within a trend as a trend change. The general rule of thumb is to trade with the daily chart trend until the price action clearly tells you it has ended. Instead, when a market has been trending and starts to retrace, begin watching key support and resistance levels for potential price action reversal strategies to rejoin the trend from a high-probability point. The next chart we are looking at it shows an example of trading a pin bar inside bar combo signal as a reversal signal with the trend.

Note that price was clearly in an uptrend, then it retraced back to a swing level of support within the trend, followed by the formation of a pin bar and two inside bars within that pin. Since price began pushing higher from this price action pattern , after a retrace lower, we call it a reversal signal, since it caused price to reverse from the retrace lower back into the uptrend….

The chart below shows an example of using an inside bar price action signal as a reversal signal with the dominant daily chart trend. Price action reversal patterns can be used counter-trend as well.

Whilst it is a bit more advanced to trade counter-trend, there are some simple things you can look for to put the odds in your favor when trading against a trend…. The main thing to look for when considering a counter-trend reversal signal is if it has formed at a key level of resistance or support.

The chart below shows us a clear example of a good counter-trend price action reversal signal. This was a bearish pin bar sell signal that formed at a key chart level of resistance. The next chart below, shows an example of a counter-trend fakey reversal sell signal that formed at a key chart level of resistance. Note the similarities between this price action reversal signal and the previous pin bar reversal above.

For more information on trading price action reversal signals and other price action patterns, click here. Since price began pushing higher from this price action pattern , after a retrace lower, we call it a reversal signal, since it caused price to reverse from the retrace lower back into the uptrend… The chart below shows an example of using an inside bar price action signal as a reversal signal with the dominant daily chart trend.

Whilst it is a bit more advanced to trade counter-trend, there are some simple things you can look for to put the odds in your favor when trading against a trend… The main thing to look for when considering a counter-trend reversal signal is if it has formed at a key level of resistance or support. The daily chart time frame and 4 hour chart time frame are the best time frames for pin bar reversals and fakey reversals. Price action reversal signals can often mark important turning points in market or even trend changes.


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