Best trading system and strategy for SIDEWAYS Forex Market. Trend Reversal Trading System and Strategy – How to Identify And Trade Trend Reversals in Sideways Forex Market.
How to Identify Reversals – Properly distinguishing between retracements and reversals can reduce the number of losing trades and even set you up with some winning trades.
A reversal is a change in the direction of a price trend, which can be a positive or negative change against the prevailing trend. On a price chart, reversals undergo a recognizable change in the price structure. A reversal is also referred to as a “trend reversal,” a “rally” or a “correction.”
BREAKING DOWN ‘Reversal’
- An uptrend, which is a series of higher highs and higher lows, reverses into a downtrend by changing to a series of lower highs and lower lows.
- A downtrend, which is a series of lower highs and lower lows, reverses into an uptrend by changing to a series of higher highs and higher lows.
Reversals often occur in intraday trading and happen rather quickly, but they can also occur over days or weeks of trading.
Technical analysts watch for reversal patterns throughout the day, because they can indicate the need for a different trading strategy on the same security or can provide an opportunity to profit. Intraday reversals are often the result of news events and company announcements that change the valuation outlook for a specific stock.
STOCHASTIC Trend Reversal Trading System Rules
STOCHASTIC Trend Reversal Strategy is an effective system for forex market. This system is suitable for forex because currencies tend to move in range.
- Best Time frame : H4 and Daily.
- Currency pair : Majors and minors.
This is overbought and oversold strategy with stochastic and cycle indicators. Advantages This system works good in sideways market.
- Disantavages In trending markets can make mistakes.
- The best time frame for this system are 4h and daily.
- You can use this system also for binary options high/low, Expiry time 2-5 candles.
Price Action Reversal Trading
- Pin Bar Reversal
Basically a Pin Bar is a candle that has a small body and a large nose that is rejecting either higher or lower prices.
The thinking behind the Pin bar is quite simple; Price has moved higher or lower before a wave of orders snaps price back in the other direction.
Like all price action signals, not all Pin Bars are created equal. There are certain factors that go into making one Pin Bar better than another. A few of these factors are:
- The time frame the Pin Bar forms on
- Where the Pin Bar forms. Does it form in a range or in a nice trending market?
- Is there space for price to move into when price breaks the low or high of the Pin Bar?
- Is the Pin Bar rejecting a logical support or resistance area
Learning all the factors that goes into making one signal better than the other is all part of the education process for price action traders.
- Bullish and Bearish Engulfing Bars
Engulfing Bars are very obvious price action signals that are momentum trades. Quite often engulfing bars will be massive in range and one of the largest candles on the chart.
A lot of traders become worried about large price action signals, where instead they should be getting excited. Large engulfing bars are showing a large shift in momentum and the bigger the better.
The best signals are always when they are really obvious, and as soon as you flick to that chart they stick out like a sore thumb! Stick to the really obvious and simple engulfing bars and avoid trying to trade something you have to search really hard to find.