$Study : Reversal Setups

FX:AUDUSD   Australian Dollar / U.S. Dollar
Reversals and what to lookout for:
in the following text we take the reversals in downtrending markets in action but its basically the same but
vice versa for uptrends.

if you determined a level of interrest where you want to do buisness in ie. in the following cases at a support level
you have to understand first that price dosent care about YOUR Bar/Candle interval price moves independent of
time intervals. so a support level on the daily intervall and a reversal on that level may never be VISUALLY realized
on the daily chart but on much lower time intervals *but thats a topic for another article , we focus now on basic
reversals based on price behaviour .

and again each reversal presented in the chart has different market mechanics and market psychology at hands*
but then again on each setup shown in the chart there can be written whole articles which will be covered on a later
date. aswell as the markets arent black and white (which would be to easy ;) ) so there comes money/position and
risk management into play* which again will be adressed some date later.

so that aside lets dive into the reversals as in the words of richard wyckoff

A Reversal is nothing more then a change in trend based on a change in behaviour of supply and demand

Price only stops a decline if the buying holds support then we may conclude that demand is begining to overcome
supply, and that the next logical developement for final confirmation of a reversal will be the markets ability to rise
above the top of the last rally.

If an established trendline which serve as a guide on the stride and pace of the price movement gets violated,
often but by any means not always may signify that the formerly force of supply or demand in effect is now becoming
exhausted. this may either mean that the price movement is merely changing its rate of progress , or it may mean that
the trend is definitely in danger of being reversed.

The actual violation of a trend line often (but by no means invariably) may signify that the previously effective
force of supply or demand has been overcome by a new force which is causing a new trend to develop. However, as
before, we must look to the other accompanying symptoms for our decision as to whether this one indication alone
(i.e., the violation of a trend line ) may be accepted as true or false.

It is bad practice to buy an Instrument simply because it has penetrated an established supply line or broken out of
an extended congestion area; or to sell it merely because it has violated a line of support or broken through the
bottom of a trading zone, and for no other reason. Do not forget: The breaking of a trend line , by itself, is neither a
conclusive nor an all-inclusive symptom. The significant thing is HOW the line is broken; the conditions under which
the change of stride occurs. The behavior preceding such an indication must also be taken fully
into account.

In short, the quality of the buying or the selling at and around the point of penetration determines whether the
violation of an established stride may be regarded as evidence of a further movement in the direction of the
breakthrough, or whether it means only temporary change. This admonition applies equally to the violation of former
tops and bottoms and old levels of resistance and support.

If one doesn't understand trend, he’s going to have trouble understanding breakouts, retracements, and reversals. If
he doesn’t understand support and resistance , he’s going to have trouble understanding how and where and when
to enter and exit, much less where to take profits.

more to come.....

hey, mate. how can i insert images into the chart? is there some tip?
+1 Reply
Invezted Alexander_Nikitin
hi, i drew them by hand.. so i dont know ?
I like it, a nice resume!
+1 Reply
Simple, clear. invaluable knowledge! Thank you, Invezted!
+1 Reply
Really informative! I liked the image attached; good diagrams.
+1 Reply

is a shakeout pattern and the selling climax a matter of degree?
i am analysing china indices - shanghai and china a50 and hope you can shed more light on it
+1 Reply
Invezted dchua1969
yes , of degree/pace/stride and of the recovery ,aswell as the retest on a selling climax ie. the secondary reaction to the lows of SC will confirm it , a shakeout ususally doesent retest the lows it has at best a minor correction,
hope this helps
wow sweet site promo bro
+1 Reply
Very smart, great job!
+1 Reply
Thank you Guys! , i will keep posting articles on a regular basis, covering several interresting topics, stay in touch and follow me ,
again thank you , i appreciate your likes and comments looking forward to work with you all , enjoy the sunday.
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
SV Svenska
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out