Bysimplifying his trading system and trading only 5-minute pricecharts he's found a way to capture profits regardless of marketdirection or economic climate. Reversal that leads to a swing for the next few hours or the entire day Most strong bull trend bars on the daily chart have at least a small tail on the bottom, which is usually caused by an opening reversal (a selloff on the open that reverses up, and it is therefore a reversal pattern).Ī detailed guide to profiting from trend reversals using thetechnical analysis of price actionThe key to being a successful trader is finding a system thatworks and sticking with it. Usually fast move to a magnet (support or resistance). Opening reversals The components of an opening reversal pattern are. They bought the reversal up, betting that the rally would get back above the breakout point (the low of the first hour) and back into the trading range.
Even when the market trended down at midday, they expected the breakout to the new low of the day to fail, because that’s what usually happens on trading range days. When experienced traders detect those feelings, they look at them as opportunitiesthey bet that every breakout will reverse and they look to buy low, sell high, and scalp. Beginners feel confused and disappointed by the repeated reversals, not realizing that these feelings are the hallmarks of trading ranges.