How to Day Trade Short-Term Reversals – FXPremiere Group brings you the news on knowing when a trend is going to end can be a very powerful and profitable piece of knowledge. For those with even a limited knowledge of the trading strategies that we teach you probably notice how consistently Smart Money tend to cycle the market is pushes of three over the span of 3-5 days. – How to Day Trade Short-Term Reversals
Understand just this small piece of information can keep you from placing a trade when the market has a higher probability of reversing. But what else can we use to more effectively predict when the weekly trend is going to reverse? This fx training article is going to be extremely valuable. In it we are going to completely cover a fx trading strategy that can stand alone, or you can use it along side any trading system you are already using.
CRITERIA FOR THE TREND EXHAUSTION REVERSAL SETUP
Before we discuss the criteria for this specific reversal trade setup we need to lay the foundation. For those familiar with our forex bank trading strategies much of this information will be familiar. If you are new however, you may want to read other training article and videos on the site covering how to determine market trend. So then what criteria do we generally look for before considering market reversal?
1.) Do we have 3 clear cycles?
2.) Are those cycles moving at least the Average Daily Range (ADR), and preferably 90 pips or more each?
3.) Have these 3 cycles occurred over the course of 3 or 4 days?
4.) Was the overall move (From the start of the first cycle to the end of the third) at least 150 pips?
Once this criteria has been satisfied the foundation for an “exhausted” market becomes established, and the possibility of a reversal begins to rise. Its important to remember that in trading we must be adaptable. There will be slight variations from the four points listed above and using some common sense goes a long way in those circumstances. Let’s say for example that we see only 2 cycles but they are much larger than average both moving 160+ pips each, and it occurred over 3 days. We have to remember that some level of human intervention in trading is always necessary. It is important to remember why those rules are in place – How to Day Trade Short-Term Reversals.
IDENTIFYING MARKET EXHAUSTION
We have to this point laid the foundation of when we should begin looking to trade a forex rend reversal. When though is the trade taken and what exactly are we looking for to signal a trade entry. One thing I always say to members is “we need to see manipulation at a high probability point” before taking a trade. In the example of a exhaustion setup I do as well prefer to see a high probability point (Major previous S/R level, 200EMA.