1. The market must have a clear trend before this pattern.
The forex trend market only includes two situations of uptrend or downtrend. For the non-directional trend of sideways and oscillating order, it generally does not belong to the precondition of the reversal pattern. The more obscure the trend of the object of analysis before the pattern, the less likely the pattern is to become a reversal pattern.
2. The trend line is effectively broken.
During the completion of the entire pattern, it will be accompanied by the phenomenon that the previous pressure line or support line is effectively broken through. If the trend line has not been effectively broken when the pattern is nearing completion, it is very likely that the pattern will evolve into a consolidation pattern with a longer time span.
Even if the main trend line is broken, if it is broken later, the reversal will not occur immediately after the end of the pattern, and it is more likely that the original uptrend or downtrend is sideways. Pattern change. The appearance of a reversal pattern also sometimes only indicates the end of the previous trend, and does not guarantee that a new trend will form immediately.
3. If the reversal pattern is formed at the bottom, then in the second half of the upward breakout of the pattern, it is required to be accompanied by the gradual enlargement of the volume.
Forex trading volume often plays a key role when major resistance levels are breached. The more ideal the volume-price coordination, the stronger its reliability.
When the upward consolidation pattern is about to end and the reversal trend pattern is basically formed, in most cases, favorable policies or fundamentals will appear at the same time to support the development of the market.
4. The greater the span and fluctuation range of the reversal pattern, the greater the market fluctuation range after the reversal is formed.
If the brewing time of the pattern is longer and the fluctuation range is larger, then a larger-scale trend-type market may appear later.
Source: Forex Rebate http://www.forex-rebate.com
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October 20, 2018, 02:04:49 PM
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