Are you often getting in trouble when a trend reversal happens? If the answer is yes, now is the time you can turn the table around. This article will help you build a better understanding of reversal and methods to take the best of it.
Table of Contents
1. What is a Reversal?
Trend reversal is the shifting of the price, meaning that the price changes from the current direction to the other, from upside to downside, or vice-versa. It is identified by the overall behavior of the price in a timeframe, not just by one or two candlesticks on the chart.
A trend reversal can be mistaken for a pullback as their price movement both turn to the opposite direction. In fact, while a reversal is a switching of trends, a pullback is a temporary counter-movement of the price within a trend. A pullback can be a potential reversal and hard to predict if it is a short-term turnaround or an entire reversal.
2. How does a Reversal affect traders?
Radical change often comes with confusion. When a trend reversal happens, many traders face different difficulties to exit their trade or decide whether to join the market. As an intraday trader, you might find hardship every time you face a one, but don’t let it overwhelm you as ‘The greater the difficulty the greater the reward’.
Trend reversal can happen over any timeframe. For instance, hour, day, week, or year, and it can be rapid or last for a very long period. But not all of them affect every trader. Even one in the 5-minute chart can influence a day trader, but it’s not a big deal to a long-term investor.
When a reversal happens, it may help traders get a big win if detected on time or cause a loss for those who fail to catch up. That being said, being able to identify a trend reversal may end up getting more winning trades or timely exiting trades when there is no favorable condition.
3. How to capture a Reversal and master the game?
Traders can predict a reversal by watching the chart and analyzing the price action. A reversal of an overall trend happens usually followed by a series of certain technical patterns. The price of the uptrend will turn into a series of lower highs and lower lows when reverses into a downtrend. And a reversal from a downtrend to an uptrend is often followed by higher highs and higher lows patterns.
It might sound too hard if you’re no good at observing the charts. Fortunately, we live in a modern time with modern technologies as our great helpers, and that’s why there are more solutions to this.
Technical traders can use another useful method to spot trend reversal: indicators. Many charting platforms nowadays have integrated technical indicators for technical analysis. TradingView, one of the most popular platforms at the present, offers some basic indicators to better examine the chart. In terms of reversal, these available indicators can partially help traders spot upcoming trends.
However, these indicators are just some basic tools that only benefit traders that have enough technical analysis skills and experience to make use of them. Reversal is not that easy to determine, and lack of clear evidence can lead to fault identification and cause heavy loss.
Still a little bit overwhelming to catch up? Don’t worry cause here’s a better and friendlier tool.
4. A good indicator to detect a Reversal, and even more than that!
Finding a powerful tool is the key to taking advantage of reversals, a powerful indicator that has been specifically developed for spotting trend reversal will be a good help.
Order Block Gen – an indicator developed by Indicator Vault that can track all possible market turning points and help you determine how the price will behave.
Order blocks are buying/selling “footprints” left by large institutions. And just like the law of gravity, the price will be pulled toward these blocks and tends to revisit these zones.
Trend reversal is always a typical thing in trading, and being able to capture it will gain a big benefit. The right and powerful indicators can significantly help identify a potential reversal. Never getting in trouble again when trend reversal happens and take full advantage of it instead.
Order Block Gen is easy to use and comes with many wonderful features to help you deal with reversals and even more than that. Take a chance NOW and don’t let success awaits you. Find out more about this indicator with this complete guide HERE.