Top or Bottom reversal?

Sacktheboss

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Hi everyone,
I am as new as the term 'newbie' can get. I've never traded, not even a demo account. At the moment I am trying to learn as much as possible before enrolling in a course to help get me started practically. At the moment I am reading a book about Candlestick charting and have a question that relates to something that I have read recently. I'm probably going to have a ton of really simple questions throughout my early stages of learning but I guess if I don't understand something then I need to ask right?
Hopefully people will have patience with what might seem the most simplest of questions. Oh well, Preschool here I come....

The question: When referring to a top or bottom reversal pattern, does this mean that the formation will take place at the top of an upward trend in the case of a 'top reversal' and at the bottom of a downward trend in the case of a 'bottom' reversal?

Unfortunately, when I try to google the terminology all I get in the results are different examples of candlestick formations that are stated as either a top or bottom reversal but no explanation or definition of what is being spoken about when top or bottom is used in front of the word reversal.

I'm guessing that the answer is probably quite obvious and that maybe I have answered my own question, (I don't know) but hopefully someone can confirm that I am correct and/or explain it for me?
Thanks in advance :)
 
Hello Sacktheboss

Usually I would use my own "reversal" trend-lines to forecast the possible upward & downward moment in the S&P 500. So once the price hits the "Bottom" line it will rebound to the "Top" line and vice versa while hopefully still moving in an overall upward pattern, but basically all I'm doing is following the Top & Bottom reversal pattern.

Other times I would use the Top & Bottom reversal pattern using "Horizontal" lines in a given chart to judge the possible future trend of the "said" pair.

Example:

If the USD/CHF hits my "Top" trend line then I would be placing a "Sell" order, or if it hit my "Bottom" trend line it would be a "Buy" order.

I could set "Buylimit" order/s on the "Bottom" trend line in the hope of catching a reversal or a "SellLimit" order/s on the "Top" trend line.

Good luck
Liz
 

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Thanks Liz,
Not quite up to placing orders just yet however I did understand what you are talking about when using trend lines. My query is more in relation to candlestick formations for example; the shooting star.
What is the difference between a shooting star bottom reversal and a shooting star top reversal? I did some more reading today and from what I can see, I think I may be correct in my assumption that the 'top' and 'bottom' just refers to where the candlestick pattern is forming; either at the top of an upward trend or at the bottom of a downward trend.
I'm guessing that if a shooting star forms at the top of an upward trend or resistance levels, then it is indicating that a reversal in the trend may be possible and that the trend may change direction into a downward trend and vice versa if the shooting star forms at the support levels or bottom of a downward trend that it may indicate a reversal back in the opposite direction?

Any further clarification on this would be great, hopefully I am heading in the right direction with my assumption :)

Thanks again for your help.
 
Some traders are so keen in picking up tops and bottoms that they keep on trading any sign of reversal in a trend and trade against it to face loss. Its such an addiction that they keep on doing this without any proper strategy.
 
I think some of those candlestick patterns have a different name if they are on top vs. on bottom. I think I need to review them.

Sive has a whole chapter dedicated to Candlesticks here...

https://www.forexpeacearmy.com/fore...-chapter-9-part-i-candlesticks-what-they.html

Yeah, I agree some candlesticks of reversal helps a lot for reversal pattern. For instance such as Tweezer Bottoms or Tops and Falling Wedges. I often see this kind of pattern on charts but I don't trade reversal or correction. Those pattern just prevent me from entering silly trades.
 
A good method of picking up tops or reversal is that you should implement trend line and then wait for it to break. For more confirmation, you can even wait to get a retest of that trend line or recent top/bottom level.
 
Hi everyone,
I am as new as the term 'newbie' can get. I've never traded, not even a demo account. At the moment I am trying to learn as much as possible before enrolling in a course to help get me started practically. At the moment I am reading a book about Candlestick charting and have a question that relates to something that I have read recently. I'm probably going to have a ton of really simple questions throughout my early stages of learning but I guess if I don't understand something then I need to ask right?
Hopefully people will have patience with what might seem the most simplest of questions. Oh well, Preschool here I come....

The question: When referring to a top or bottom reversal pattern, does this mean that the formation will take place at the top of an upward trend in the case of a 'top reversal' and at the bottom of a downward trend in the case of a 'bottom' reversal?

Unfortunately, when I try to google the terminology all I get in the results are different examples of candlestick formations that are stated as either a top or bottom reversal but no explanation or definition of what is being spoken about when top or bottom is used in front of the word reversal.

I'm guessing that the answer is probably quite obvious and that maybe I have answered my own question, (I don't know) but hopefully someone can confirm that I am correct and/or explain it for me?
Thanks in advance :)



You understood correctly. Reversal means price changes its direction, what in turn means that "down" should change to "up" and vice versa. Candlesticks patterns will be presented accordingly
 
You understood correctly. Reversal means price changes its direction, what in turn means that "down" should change to "up" and vice versa. Candlesticks patterns will be presented accordingly

Also a good method to pick reversals is to know the volume of any certain pair's movement in any direction. A pair usually do a correction move after some amount of pips according to its behavior.
 
Thanks Liz,

What is the difference between a shooting star bottom reversal and a shooting star top reversal?

Any further clarification on this would be great, hopefully I am heading in the right direction with my assumption :)

Thanks again for your help.

A shooting star is always at the top of an uptrend. Because it is as if it was falling from the sky like a shoting star. It has bearish implication.

For instance you've got one in the following chart (old NJ)


NJ.png

But the same candle, placed at a bottom, has no imolication at all.

Learning candle pattern is very important to see signals. As they come directly from the chart, and not from a mixed of indicators, they are very accurate.
 
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