Forex trading strategy-7 (Reversal Pattern.)
If the price is moving in a trend for some time, there will be chance where it will make a reversal and this is the time where you are going to make money if you are able to identify the forex reversal on time.
The problem with most traders is they do not know when the forex reversal is happening and how to identify them on time to grab the most pips. Therefore I am going to share with you the techniques that I use to help me identify forex reversal.
First of all, you need to know how to read candle patterns in order to identify forex reversal on time. Below are the 3 reversal candle patterns that I use to alert me of impending forex reversal.
1) Railway Track
2) Hammer or Inverted Hammer
3) Spinning Top or Spinning Bottom
Spinning Top Pattern
These are the three most reliable reversal candle patterns that I have came across in my years of trading.
Next, you need to add an oscillating forex indicator to your arsenal. I usually like to use the slow stochastic but you can also use the RSI as well. If you see any one of the above three forex reversal candlepatterns at an uptrend, you must check your oscillating indicator to see if the market is currently oversold or not. If the market is oversold, you can then confirm that a forex reversal is going to happen and the opposite is true as well.
After you got the confirmation from both the candle patterns and the oscillator, you need to wait patiently for any trend line break before you enter a trade. This is to prevent you from being stopped out before the price move in your desired direction.
Having the patient to wait for trend line break is like buying insurance for your trades, therefore you must adhere to the above three methods of forex reversal trading.
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