Determining the moment of reversal of the Forex price is a guarantee of successful trading in the foreign exchange market. This is equally important for opening positions on the stock exchange and for their closure. You can define trend reversal in a huge number of ways, including patterns, indicators, observations, etc. Learn more about it below.
Rules Of Trend Reversal In The Foreign Exchange Market
Among a large number of trend reversal rules, we will highlight the most important:
1. Temporary periodization. Traders who prefer long-term timeframes should carefully monitor the state of their trend, while traders working on short-term timeframes can forget about it.
2. Defining indicators of the trend. An experienced trader knows that in this he is best helped by a self-drawn scheme that reflects the highest and lowest price indicators.
3. Track the trend line. If you notice that the price passes through the trend line, then this is the moment of its reversal.
What is a trend reversal indicator?
Trend indicator – a financial tool that allows you to determine the time of price reversal. You will be able to timely identify the indicator signal, if familiar with the features of his work. Among the most accurate indicators are:
1. Q2MA indicator – if two parallel moving lines begin to intersect, it will be a signal of price reversal;
2. Forex eye indicator – indicator that helps to determine the minimum and maximum price achievement, on the basis of which predicts the moment of price reversal and signals about it;
3. Reversal indicator – an indicator that a trader can configure to signal exactly at the timeframe in which it trades. With it you will be able to anticipate the moment of reversal as accurately as possible so that you can close your positions;
4. Indicator of market reversal. He signals to the trader that the price reversal has already occurred and it is time to close its positions;
5. Trend reversal indicator. The forecast of this indicator is based on the position of the sliding line. It is it that displays the moment of price reversal.
Trend Reversal Points And Their Definition Theory
Determining the point of reversal of the price, i.e. the signal that it has begun to strive for decline – the matter is simple, however, it requires from the trader a good base of knowledge of the market and, of course, experience. He was assisted by different theories whose knowledge would help the trader increase his deposit, for example, three-phase theory of Dow or Elliott’s diagram – wave theory. Before applying them, study all the features of all theories as much as possible.
In addition to theories, traders can determine the price reversal point using graphical methods of data analysis. For this you will need to be able to work with diagrams, shoot them with repentance and analyze the information. The price reversal point will be reflected in the chart, after which the trader will be able to close his trend.