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Chapter 19, Part IV. Retracements and Reversals.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Nov 3, 2011.

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  1. Administrator

    Administrator Just Administrator :-)

    Sep 24, 2007
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    Part IV. Retracements and Reversals. [​IMG]
    Commander in Pips: Let’s start our discussion right from the followed pictures:

    Chart #1 | 60-min EUR/USD Is it right time to buy?

    Here we see nice classical support line, see some acceleration to the upside. All that we have to do is just wait some shallow retracement and buy, right?

    Pipruit: Right.
    Commander in Pips: Wrong:

    Chart #2 | 60-min EUR/USD I guess not

    Pipruit: Well, that is a current concern. Something like that I catch again and again on my demo account. I think we need to discuss some clues to estimation what is it – either retracement or reversal.

    Commander in Pips: That’s right. Although this is very difficult to do, there are some clues and prompts that market could get us. From your words it becomes clear, since you’ve often been wrong, that you fail to recognize when the market shows retracement and when it shows reversal. As a result you take the wrong positions and pull the trigger too early. Let’s try to learn some signs of retracement and reversal, how to estimate them and what to do if you’re trap in a wrong position.

    Ok, what is a retracement – this is short-term moves against the trend. In other words, the market makes so-called pullbacks, but then returns to trend continuation. Still this definition is too blurring. We need to capture some details of trend movement to catch some qualities of retracement.

    Reversal instead is a permanent or at least long term change in overall trend direction.


    Here is a picture, where we see two reversal points in circles and many retracements as on up trend as on down trend:

    Chart #3 | 60-min EUR/USD reversals and retracements
    #1 Administrator, Nov 3, 2011
    Lasted edited by : Apr 21, 2016
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