Hello everyone! We continue our training. Today we will try to figure out how the trend changes its direction. I want to say right away that this is a schematic designation, having understood which, you will be able to identify important zones and structures of trend change. When you understand the principles, then you can make money on it.
Accumulation
The first area to pay attention to is the accumulation zone. These zones collect large volumes of limit orders on both sides of them, which is liquidity. This liquidity will be eaten up by the market at some point.
Breakdown
At some point, the price makes a breakdown in one of the sides, thereby eating up liquidity. This breakdown may be a normal continuation of the trend, and in order not to confuse it with a reversal, you need to wait for the next phase.
Update
After the breakdown, the price turns sharply and updates the minimum of the accumulation zone. What happened here? If the trend had the strength to continue its movement, the price would not have formed a new low After updating the accumulation zone, the price indicated to us a possible trend change.
Correction
Then we can observe a return to the accumulation zone, but this movement turns out to be weak, and we do not see an update of the maximum of the accumulation zone. At this point, it is possible to consider opening a short position. But if you don't have time to open a position, don't worry, the price will give you another chance. After updating the last minimum, the price is again adjusted to the accumulation zone, but this peak is lower than the previous one. This reversal is a good signal to enter a position.
This is how the price behaves when the upward movement is reversed. To reverse a downtrend, the same rules work only in the opposite direction.
Conclusions
This scheme works perfectly. Using it, you will be able to find excellent entry points and close positions that were opened against the emerging trend. History repeats itself, and you can see it on the graph. Learn how to work with these schemes in order to be able to enter the position in time in the future. Learn, practice and earn.