Reversal trading strategy pdf

There are three main types of price movements: trends, continuations, and reversals.

Reverse trading example

To be a well-rounded trader, understanding all three types is essential. In this article, I examine reversals to help you build a strong foundation in price action and technical analysis, which should help make you a more profitable trader.

As the name suggests, trend reversals are a reversal in price direction.

Understanding how to trade reversals means you can enter a brand-new trend near its beginning or exit the market before it goes in the opposite direction.

Let’s get started.

Let’s first define a trend. A trend is when the price moves consistently in an upward or downward direction:

• An uptrend is a series of rising support levels with higher highs.
• A downtrend is a series of lower highs and lower lows.

A trend reversal is when the price reverses the trend in the opposite direction.

Within the area of the circle, the price will make a ‘reversal pattern.’ The reversal pattern can be quick with little volatility or might take a

reverse trading