How To Identify and Trade Reversal Bars
Regardless of the market, be it stocks or commodities. Regardless of the style, be it daytrading, swing trading or position trading. Regardless of the economic outlook and market fundamentals. If there is one thing and one thing only that experienced and profitable traders will agree on. It's that, a "Reversal Bar" at a key price and time is one of the most powerful trade setups one can know how to trade.
In this quick lession we'll show you EXACTLY how to identify the most important Reversal Bar setups. Before we do that, there are two important impressions that need to be made. You need to take these, write them down on 4x4 index cards and tape them to your computer.
The first impression is this: "Every Reversal is NOT a Top/Bottom, but EVERY Top/Bottom HAS A REVERSAL"
There are many fake out reversals. So, the important thing here is knowing which reversals have the highest probability of marking a top or bottom that can be traded. Regardless of if the Reversal Bar is at major or minor top or bottom, there are elements such as Fibonacci analysis, chart patterns, volume, etc that can give clues as to which Reversal Bars you want to trade.
Identifying which Reversal Bars present the highest probability of a trade at a top or bottom is covered for you with the Online Charts. How to enter these reversal setups is cover in your Online Charts Reference.
The second impression is this: "The Trend IS NOT your friend, IF it's about to end"
Using a combination of Reversal Bars with high precision Fibonacci analysis, you can increase your ability to notice when trends are likely to end and reverse.
Understand this point. Every trend starts with a Reversal Bar, and every trend ends on a Reversal Bar. It doesn't matter if the reversal is short term or long term. The change in trend is going to be with a reversal. While the focus here is not on Fibonacci Analysis. It's important to note that at each reversal, you will find a key Fibonacci level of some degree on some timeframe.
If you understand these two impressions. If you know what a Reversal Bar looks like. If you use the Online Charts. You can put yourself in position to enter the markets with laser like precision. You can protect yourself from buying tops and selling bottoms and be able to hold your winning trades longer! You'll have the razor sharp insight to know what trades not to enter, which trades you should enter and how to enter them with the lowest risk.
While there are various kinds of Reversal Bars. We'll take a look at three Reversal Bars you need to be able to identify.
