How to spot trend reversals In strong trends

Hi, Traders

In my last post I post the how to spot trend reversals with basic demand and supply rules and In this post I will mention How to spot trend reversals with mechanical use of trendlne, chart patters and it is the best and easiest way to spot strong reversals specially when price goes up and down with a series of high and lows.

Trading reversals is made up of two-parts, one of them is emotional and other part logical. Logical part is one which is answered quickly that If risk is really worth it, specially when reward to risk is high enough that one is forced to take that risk and the emotional part is that the trader’s ego loves to call the top or bottom. The error with this emotional approach is that often, if the facts go against ones beliefs, then so much for the facts meaning that in order to protect beliefs that a top or bottom is in play, a trader will often push ahead trying to prove their theory correct.

Let's get the answer with an example

Best way to spot when a trend is about to reverse

Chart below is the cross gbp/jpy, which is in strong down trend and it is easier to spot a correction is in play when you see a series of high's and lows which can truly give an explanation that first clue of reversals will be trade with strong cash inflow in the larger to medium term downtrend.

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For me, Its always about keeping the simple and one that offers good reward to risk and which has strong logic of trading reversals. The logical part is that risk-reward is so favorable when trying to catch or trade a key turn. You often have heard how important risk to reward is to a trader’s ability to survive and thrive in their trading. Unfortunately, it’s easy to use Risk: Reward as an excuse for the emotional pull to attempt to buy the bottom or sell the top but what about the reversals offers few clues and has some strength going ahead, this approach should either be avoided or traded carefully in a manner that will be soon explained.