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The best way to determind trend reversal

Discussion in 'Beginners Bootcamp' started by Nagen, Oct 6, 2007.

  1. Nagen

    Nagen Private

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    Is there any body who can help about up trend or down trend how to determind it's time to reverse?

    All the newbies would appreciate

    Happy trading for everybody

    cheers



    Nagen
     
  2. 3BlackCrows

    3BlackCrows Corporal

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    Hi Nagen,

    If ever there was a holy grail to any trading, being able to pick tops and bottoms would be it.

    The short answer is no - nobody can gaurantee with 100% cetainty 100% of the time that they can pick when a trend is about to reverse and if they say they can, run, don't walk the other way.

    The best way is to look for a retracement or pullback once the trend is underway then trade in the direction of the trend once the retracement has finished.

    At the beginning of a trend, price will generally move too fast too soon and will then consolidate or pullback a bit before going on it's way again.

    It's like running a marathon and sprinting the hardest you can from the start line. Pretty soon you will be exhausted and need a break before continuing on your way.

    You can use patterns such as channel breaks, triangles, pennants etc... or bounces of support/resistance levels or Fibonacci and moving averages to determine when the trend has finished it's consolidation and started to continue again.

    The only way I can suggest to try and pick a top or bottom is to look for extremely significant signals such as hammers, spinning tops, doji's and 1-2-3 patterns on the higher timeframes (the higher the better)

    For hammers, spinning tops and doji's the wick of the candle must be at least twice the size of the body and the longest portion of the wick must be in the direction of the original trend ie: upwards for a long trend reversal and downwards for a short trend reversal.

    If these signals coincide with each other on all of the timeframes from highest to lowest, you will have a strong argument for a trend reversal.

    In saying that these signals must also be coupled with strong fundamental indicators (such as COT) and technical indicators (such as MACD divervence/convergence) in order for them to be effective.

    Hope this helps - Happy Trading! :)
     
  3. PaDaWaN

    PaDaWaN Recruit

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    thanxs..good explaination dude
     
  4. Nagen

    Nagen Private

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    Hi

    Thank you so much very nice explanation, I think it makes sense to me

    Thanks again

    Nagen
     
  5. Cyclon

    Cyclon Company Representative

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    traders have a saying

    hi nagen

    actually they have too many damn sayings - but here's one:

    "the pigs get slaughtered"

    there is some truth to that cuz picking tops can be dangerous
    i'm guessing you probably know and that is why you asked

    cuz if shorting near (the) top and the top goes, odds are it gaps and runs, taking out the stops

    a suggestion is wait for confirmation
    try this and look for it on smaller timeframes so you can observe it often:

    place the SMA 68 on your chart and watch for a breakdown of any trend .


    when the first major move away from the trend is outta gas you will have crossed at least the 68 SMA and more than that.

    the bounce begins to take price a fair ways back toward the area of the trend breakdown again, but first it will have to do business with your MA.

    it will cross it slightly and not go far and then reverse if this is going to become a major reversal. if it is not then a continuing breach will take it to new ground in the trend. observe the kind of range i'm talking about and then place stoploss accordingly after the price again fails at your MA.

    this will probably be an elliott wave secondary move such as a 3rd or C and will usually be decent to trade. (of course there are numerous disclaimers) :D

    but this approach may give you a method to identify your targets and stoploss once you have found the appropriate timeframe on which to apply it which matches your trade objectives.
     
    #5 Cyclon, Oct 9, 2007
    Last edited: Oct 10, 2007
  6. vidigix

    vidigix Private

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    Simply put Nagen,nobody knows where the market is going...
     
  7. timinaz

    timinaz Recruit

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    I am awesome at picking tops and bottoms. the problem is that I have been buying at the top and selling at the bottom. just ask me what I am doing then do the opposite
     
  8. MYJ

    MYJ Private

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    Picking up tops and bottoms

    timinaz
    How do you pick tops and bottoms? What do you refer to? Stochastic? MACD? and what time frame do you look at?
     
  9. Pharaoh

    Pharaoh Colonel

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    I'm even better. I never even try to pick tops and bottoms, but I can buy or sell in what looks like the middle of a strong trend and movement will automatically reverse. :(
     
  10. rpaco

    rpaco Sergeant

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    Yes I was always amazed at how much influence I had on the market, my small input often caused a trend reversal :D
     

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