DLavrov

Facebook - How To Trade Trend Reversals

NASDAQ:FB   FACEBOOK INC
Sometimes entry in a market against the main trend can be very profitable. But for opening such trades we must have solid reasons and very strong signals. One of the most reliable trend reversal signal is based on divergences.

What is a divergence? It's a situation when the price diverges with the movements of oscillators such as RSI , Stochastic , MACD mainly. There are bullish and bearish divergences, standard and hidden. Sometimes you can face with double divergences where the market forms 3 tops/bottoms but not 2 like with standard divergences.

I prepared an example of a standard bullish divergence from Facebook market. I hope you will get a better understanding of how to trade based on divergences

The price bounced from 123.00 level and RSI confirmed the price reversal. We got a new swing low which was lower than the previous one. But RSI made a new swing low higher than the previous one. It means that the price diverged with RSI and we got a bullish divergence . The same goes about the price and MACD lines.

This bullish divergence could be used for opening long positions against the main downtrend based on the trend reversal signal. Entry level could be above the local swing high after the divergence - it's 136.50 level. As you can see the market made a good upward movement. It could give you a profit!

Also, I advise you to look at DMI indicator. How it moved in the period of bullish divergence forming. ADX line made new swing high lower than the previous one. We got a signal that bears became weaker and the market had no power for moving lower.

Divergences can be used in different markets and timeframes.

Divergences, as well as reversal chart patterns, allow trading against the main trends. In other cases, trading against the main market movements - it's a very unprofitable idea!



If you like such format of posts, please support it by your LIKEs!
Any questions - please write in comments.
THE BEST OFFER!
GET access to all our PREMIUM stuff for FREE - Send me DM for more details or visit >>> https://tradunity.com/beta

KNOWLEDGE. EXPERIENCE. TOOLS! SUBSCRIBE >>> https://youtube.com/c/tradunity
Thanks DLavrov for the amazing education...appreciated!!!
+2 Reply
DLavrov duyca17
@duyca17, you are welcome!
Reply
A post about how you also follow the main trend would be highly appreciated too. Thank you.
+1 Reply
DLavrov umeh_barry
@umeh_barry, ok, I will do it!
Reply
Thanks. really Knowledgeable post.
Reply
DLavrov umeh_barry
@umeh_barry, you are welcome!
Reply
Few are those who will give free education to their followers. Thanks Lavrov!
+1 Reply
DLavrov PetarBogdanov1
@PetarBogdanov1, you are welcome!
Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features Pricing House Rules Moderators Website & Broker Solutions Widgets Charting Solutions Get Help Feature Request Blog & News FAQ Wiki Twitter
Profile Profile Settings Account and Billing Get Help Ideas Published Followers Following Private Messages Chat Sign Out