Tuesday, April 24, 2012

Forex Reversal Identifying Techniques

June 7, 2009 by  
Filed under Forex Strategies

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

Railway Track

Railway Track

2)    Hammer or Inverted Hammer

Hammar Pattern

Hammar Pattern

3)    Spinning Top or Spinning Bottom

Spinning Top Pattern

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.

Other Related Posts:

  1. Forex Indicator – Important Reversal Candlestick Patterns You Must Not Miss
  2. Forex Trend Identifying Method
  3. Using Forex Fibonacci Indicator To Tell Reversal
  4. Forex Buy Sell Signals
  5. Forex Indicator – How To Trade Using Moving Averages


2 Responses to “Forex Reversal Identifying Techniques”
  1. Armin says:

    as you said the crucial key is waiting enough to be convinced of a reversal trend. and how hell its hard

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