However, they need to understand that the bears have taken control,Īnd they should try to take at least one sell signal. There were many opportunities to sell (red rectangle) below a bear bar in the bear trend. A lower high major trend reversal frequently follows a higher high reversal. Sell below a bear bar closing near its low. A reversal down from a breakout above a bull flag (here, a triangle) is often a higher high major trend reversal. Buy above a bull bar closing near its high (green rectangle). The 2nd reversal has a 40% chance of being major, like here. 2nd pullback that grows into opposite trendįirst breakout above a tight bear channel is typically minor.The components of a major trend reversal include a The math is good for both these early entry traders and for those who wait for the strong breakout into a clear trend. These traders are looking for low risk (a tight stop), but that almost always comes with low probability. Since traders are entering before the new trend is clear, the probability of even the best looking setup is usually only 40%. Trading a major trend reversal pattern is an attempt to enter at the start of a new trend, hoping that a series of trending highs and lows will follow. Major trend reversalsĪ bull trend is a series of higher lows and highs, and a bear trend is a series of lower highs and lows. The key is to understand what forces are behind the price action patterns and be ready to trade them as you see them unfold. Some traders would call it a final flag reversal, others might see a major trend reversal, and some would concentrate on the failed channel breakout. For example, there can be a failed breakout above a bull channel at a measured move projection, and the breakout might have been out of a triangle.
So which is the best price action trading pattern for swing trading or for scalping? Which is the best for Forex markets? What about for day traders or commodity trading? It does not matter because any pattern can be the best, depending on the chart in front of you.Īlso, several might be present at the same time. If you keep your mind open to all possibilities, you will begin to see them every day, in every market, and on every time frame. Be flexible because each has many variations.
These 10 Best Price Action Trading Patterns are my favorites, and successful traders use these patterns every day to make money.
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