Bullish Trend Reversals Explanation

Bullish Trend Reversals Explanation

Bullish Trend Reversals Explanation

There are some typical things that every beginner trader does. First of all, the trader tries to find an ideal entry to the market. Then, the studying stage begins – contrarian concepts, Japanese candlestick patterns, huge variety of oscillators and more others. Newcomers believe only in everything that oscillators and indicators show. All decisions and strategies are made on the base of indicators or oscillators, and every new one necessarily works with previous.

Beginners tend to make mistakes. One more is neglecting the most important indicator/oscillator – price. However, the price is the only indicator takes into account all the factors: political, geographical and economic, inexperienced traders do not pay enough attention to it and do not understand how important it is. For some of them understanding is very hard, that is why they do what they have learned.

For making money online every trader should know the most effective market entry. It is, of course, trend reversal and a lot of experienced traders understand it. The market trend first goes in one direction, then the direction is changed and the trend moves to the opposite side. And today we will focus on the most important, in our opinion, reversal patterns, which are: inverse head & shoulders, double and triple bottoms.

Inverse Head & Shoulders

There is a moment when supply is overpowered by demand and buyers start trying to enter the market and to make the price higher. It appears when lower tops and lower bottoms stop to succeed and the bottom can not fail lower than the previous one.

Bullish Trend Reversals Explanation

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Facts About Inverse Head & Shoulders

  1. Before you start to look for a reversal, it is essential to have an existing trend, to be specific, a downtrend.
  2. Consequent lower tops and bottoms create a prevailing downtrend.
  3. There is a signal if the volume is available.
  4. There is a warning if the decreased volume is available and a downward move to the head.
  5. When the previous head or bottom is smaller than the right shoulder there is an imminent reversal, which is signaled.
  6. When a downtrend is about to end and, on the other hand, an uptrend starts, there is the increased volume (if available) and it can be seen when there is a decisive close above the neckline.
  7. You can project the inverse head & shoulders pattern elevation to the breakout point of the neckline for calculating the minimum price target.

Bullish Trend Reversals

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Tripple Bottoms

The Triple Bottoms is known for its three bottoms, which are almost equal, and a great close above the formation top. This pattern means that an uptrend will replace a downtrend. For having a triple bottom reversal you need to see how prices break over the resistance of this pattern.

Bullish Reversals Explanation

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Facts About Triple Bottoms

  1. Before you start to look for a reversal, it is essential to have an existing trend, to be specific, a downtrend.
  2. Consequent lower tops and bottoms create a prevailing downtrend.
  3. There is a signal if the volume is available.
  4. There is a warning if the decreased volume is available and a downward move to the support.
  5. The support area of the pattern is made up of equal or almost equal bottoms.
  6. When a downtrend is about to end and, on the other hand, an uptrend starts, there is the increased volume (if available) and it can be seen when there is a decisive close above the resistance.
  7. You can project the triple bottom pattern elevation to the breakout point for calculating the minimum price target.

Bullish Trend

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Double Bottom

There are two signals when we are talking about the Double Bottoms. The first one can be shown in the following situation: a downtrend is in full force, demand is exceeded by supply and the prices become lower. Then if the volume (if available) decreases while falling down, it will show its weakness. The second signal can be seen when the last bottom cannot fall lower than the previous one. The double bottom pattern seems to be completed when the price breaks over the resistance level (if available).

Bullish Trend Explanation

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Facts About Double Bottom

  1. There is a previously recognized downtrend needed.
  2. Consequent lower tops and bottoms create a prevailing downtrend.
  3. There is a signal if the volume is available.
  4. There is a warning if the decreased volume is available and a downward move to the bottom.
  5. The support area of the pattern is made up of equal or almost equal bottoms.
  6. When a downtrend is about to end and, on the other hand, an uptrend starts, there is the increased volume (if available) and it can be seen when there is a decisive close above the resistance.
  7. You can project the double bottom pattern elevation to the breakout point for calculating the minimum price target.

Trend Reversals Explanation

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To Sum Up

There are different kinds is bullish trend reversals. Beginners tend to experiment with indicators and oscillators neglecting price dictated reversal patterns. However, everyone who wants the easy income should understand the importance of the price. With the help of price we can understand traders’ psychology, and using it in a combination with other tools and analytic methods we can get better profits by more accurate confirmation of reversal patterns.

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