Identifying a reversal (trend change)

Handle123 · Sep 16, 2018

Markets rise so brokerages and exchanges get commissions.
Markets drop so brokerages and exchanges get commissions.
Markets go sideways SO BROKERAGES AND EXCHANGES MAKE GREATER AMOUNT OF COMMISSIONS.

Smaller the timeframe is quite opposite of what newer traders should trade, as degree of knowledge/memory and speed requirement is at a max, as one adds time to other timeframes perfect entry declines and profits per trade should increase but profitable positive trades may decline.

padutrader · Sep 17, 2018

the best way to learn what is a trend is to keep trading every reversal signal that comes.....you will lose probably 9 trades out of ten.

that is how i learnt to trade with the trend by blowing countless accounts trading reversal signals.
so what is the point in learning what is a reversal signal if almost all fail?

so how should you trade....wait till you can see a trend.....then fade the first reversal signal that comes.....hold through 3-4 reversal signals then book profit and then wait for the next trend.

padutrader · Sep 17, 2018

the chart shows a trend with big retracements that may mean the countertrend traders are still not cognisant or have not seen the trend so it may continue:this is live screen shot of audusd just before major news: not data release but minutes

padutrader · Sep 17, 2018

Alfing said:
One way is a swing in the opposite direction and a test preferable touching the previous trendline.

this is not always a reversal signal if the move in the trend direction was a very steep or strong or high momentum then a swing in the opposite direction and a break of a steep trendline, is of little significance, it only means the trend is weaker.
the basic premise is that a strong trend will continue and a trend line will measure that strength if the trend is strong. a shallow trendline will show the trend is not strong and so a break of the trendline will indicate the trend is becoming weaker.

brucelevy · Sep 17, 2018

I define a trend reversal with the following rules:
1. The slow and fast moving average have been steadily rising and the difference between the two moving averages have peaked.
2. The current price has closed below the prior swing low.
3. The current price is now expected to test the PRZ (Point Reversal Zone[taken from the original book on harmonics trading]).
4. Price begins to develop below the prior swing low, along with value.

I have developed an indicator which identifies this to alert me to the potential of a change in trend. It also has a feature built in that shows where the stop is supposed to go. If price closed above the stop level, it means the trend change has failed and likely to continue higher.

padutrader · Sep 17, 2018

the break of the red trendline and a retest only shows the trend,which the red trendline measures, is weaker and a reversal will be indicated only if the yellow trend line is broken

padutrader · Sep 17, 2018

brucelevy said:
I define a trend reversal with the following rules:
1. The slow and fast moving average have been steadily rising and the difference between the two moving averages have peaked.
2. The current price has closed below the prior swing low.
3. The current price is now expected to test the PRZ (Point Reversal Zone[taken from the original book on harmonics trading]).
4. Price begins to develop below the prior swing low, along with value.

I have developed an indicator which identifies this to alert me to the potential of a change in trend. It also has a feature built in that shows where the stop is supposed to go. If price closed above the stop level, it means the trend change has failed and likely to continue higher.

thanks for posting charts,that is rare in ET...it is far easier to post arbitrary comments than explain something using charts.
your definition is your definition and while your 4 points are technically correct i would prefer to wait for a lower high or some other sign of major trend weakness such as a channel like a wedge or broadening....but that is my preference......i do not like my stops being hit so i am willing to accept less reward

padutrader · Sep 17, 2018

to catch such moments [see chart] in live trading is rare and shows and indicates that you need a patience of a lioness to catch your trade......

brucelevy · Sep 17, 2018

This 300 Page pdf on harmonics covers PRZ which is the confirmation you are taking about.

As I said in my post, I also wait for confirmation of change in trend.

For the most part I wait for stop probes where traders with stops will be taken out.

Happens every time.

Then I get enter.
https://sharing.proinsta.com/assets/uploads/files/Scott_M._Carney_-_Harmonic_Trading,_Vol_2.pdf

Regardless of what method you use, these patterns simply define the aggregation of order clustering.

I don’t have the reference for the order clustering on hand but it was basically a lengthy thesis written on the subject with proofs.

Patterns, according to classical technical analysis are the aggregate mass psychology of crowds; depicted on charts.

El OchoCinco · Sep 17, 2018

If you are good at waidng through the logorrhea, there are clean write ups on reversals and how they form and what their characteristics are and how to trade them. But need to be good at analytical summary: