• Trading Reversal
• Trading Psychology

What is a trading Reversal ?

as We know market price move in Trend, and there are two types of trend: a Bullish Trend and a Bearish Trend. A Bullish Trend is when price keep goes up and making a new Higher Low. A Bearish Trend is the opposite of Bullish Trend, it is when Price keeps goes down and making a Lower High.

Reversal is a condition when a Trend either Bull or Bear almost at the end, in other word when price keeps bouncing off a resistance line (Bull Trend) or support line (Bear Trend) it could be that this Trend is almost at the end. There are two possibilities when Trend nearing the end :

Today I read about a possible long term EUR/USD Bullish Reversal. But what is a Reversal ?

as We know market price move in Trend, and there are two types of trend: a Bullish Trend and a Bearish Trend. A Bullish Trend is when price keep goes up and making a new Higher Low. A Bearish Trend is the opposite of Bullish Trend, it is when Price keeps goes down and making a new Lower High.

Reversal is a condition when a Trend either Bull or Bear almost near the end, in other word when price keeps bouncing off a resistance line (Bull Trend) or support line (Bear Trend) it could be that this Trend is almost nearing the end. There are two possibilities when prices hit resistance or support:

1. It will break the previous Resistance and Support line thus creating a new Resistance or Support.

2. Bounce off from the S/R (Support / Resistance) line and creating an opposite Trend.

There are two types of reversal : Bullish Reversal and Bearish Reversal. These wording sometimes confuses me, is Bullish Reversal a condition where the current trend is Bullish and Reverse becomes a Bearish ? or it is a Bear trend at first and it reverse to becomes Bullish ?. After reading some books and Googling, this is my definition of Bullish and Bearish Reversal.

Bullish Reversal : A condition when the current Trend is Bearish, price goes down at some point and unable to create a new Lower high. At this point price start consolidating but eventually start making  Higher Low which is the start of a Bullish Trend.

Bearish Reversal: A condition when the current Trend is Bullish, price goes up at some point and unable to create a new Higher Low. At this point price start to consolidating but eventually start making Lower High which then attract more seller than buyer, this situation start "snow balling" and created a new Bearish Trend.

Reversal is the art of  Trading. It was so attracting because of the Risk Return Ratio it offers. By Trading reversal it means that you Buy Low and Sell High. But Trading Reversal is not easy, because trading Reversal also means you trade against Market. 

• Prev
• Next