Saturday, September 23, 2017

Effective Forex Reversal Indicators

December 18, 2010 by  
Filed under Forex FAQ & Latest Post

I am really sorry for those of you who have submitted your question but I have not answered them and I am really grateful for your patience.

However I am really thankful for your questions as it will be very useful for other readers of this blog. From now on, I will try to answer 2 questions at a time so that your question can be answered as soon as possible.

Below are the forex faq for this post

What is the best method to identify reversals in the market?

To identify forex reversal, the best way will be through a combination of candlestick patterns and Fibonacci level.

Here are the forex reversal candlestick patterns to look out for

Head and Shoulder – This pattern consists of a centre head with left and right shoulder. When you see this in an uptrend, it is a sign that the market is going to move south. If you see this in a downtrend, it is a sign that the market is going to move north.

Head and Shoulder

Double Top/Bottom – The double top and bottom pattern looks like a M and a W respectively.

Double Top

123 Reversal

123 Top

Besides these patterns, you can make use of the Fibonacci 0.382 level as a way to tell reversal. Most of the time, the price moves in waves and these waves seldom retrace more than 0.382 levels.

If the wave retraces more than 38.2%, it is usually a sign of reversal. If you see any one of the above reversal candlestick pattern together with a retracement more than 38.2%, there is a high probability that a reversal is in action.

If you guys have anything to add, do feel free to give your comment below.


3 Responses to “Effective Forex Reversal Indicators”
  1. Anthony says:

    HI Kelvin. Thanls for all the hard work.

    I have a problem and wondered if you had a solution.
    I live in New Zealand, which is +13 GMT.
    This means that for me to trade the UK session i have to stay up seriously late. This is not to bad in winter die to D/Light saving kicking in.
    I currently only look at the EU.
    summer its impossible. (im not a night owl) 🙂
    Do you have any suggestion for trading in my time zone, to catch decent moves?

  2. Dr Julius Ssemakula says:

    Hullo Kelvin
    Thanks for your post
    can trend lines also be used as reversal indicators. For example if in an uptrend the price beats the short term, intermediate or long term up trend line to go into a down trend isn’t that a reversal.

    Thank you for your posts and please don’t think that we are in the holiday season and cant read your posts.

    Merry xmas Kelvin

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