I would like to show you one of possible variants how to trade trend reversals. I use SMA100 as the signal line confirming bullish or bearish trends. If the price drops below SMA100, for me, it's a trend reversal signal and time for searching sell opportunities. If the price moves above SMA100, a new uptrend begins and I search for buy opportunities. In this example the price broke SMA100. MACD supported upward movement. ADX line of DMI rose and it confirmed strong price movement. It was the trend reversal signal with further upward movement. Such trading based on trend reversals is simple, don't you think so?
And which tools you use for trading trend reversals? Please, share in comments.
Hi Dimitri, thanks! still a question left..
what is the preferred timeframe to look after trend reversals? I is right if you are a trader for 1 hour or maybe shorter and if you are long..1 24H?
DUKER
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Thanks for the analysis!
I use the intersection points of lines EMA (settings: close 55; 89; 144; 200) to calculate the trend reversal point, on the 15-minute timeframe. To determine the readiness for a breakthrough (up or down) I use BB. To clarify the levels of support and resistance, I use Fibonacci. If I am present near a computer, with an actively developing trend, I follow the volume and MACD.
I apologize for my weak English. It would be easier for me to communicate with you in Russian. :)
pitchup
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@DUKER, your english is excellent. Thanks for the tips!
@DUKER, You have amazing english, thank you for your kindly suggestion!
Woolhead
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I mainly use Fibonacci in combination with support and resistance trendlines, plus the RSI. This allows me to know what the possible price options are and gives me good buy or sell opportunities.
As you can see in the following chart, I predicted the LTC movement with the first option. I didn't account for a possible BTC crash though, which made LTC spike downwards to a lower fibonacci line than I originally thought.
In the next chart, I was able to make 9% profit in a long position during a massive crash, because I could predict where the crash would stop and to where it would rebound.
Woolhead
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@Woolhead, I see now that the snapshots of the charts don't update themselves. You'll have to click it to see how it progressed.
jerome.kelsey
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thanks for explaining this... it is really useful for someone learning TA! I am curious to know what timeframe(s) to look at? Because the SMA can look quite different and give different signals at different timeframes... Thanks! :)
what is the preferred timeframe to look after trend reversals? I is right if you are a trader for 1 hour or maybe shorter and if you are long..1 24H?