What's Indices Trend Reversal in Indices Trading?
Definition and Meaning of a Indices Trend Reversal and How to Trade a Indices Trend Reversal
In indices trading the trend-line break signal is used to signify a stock indices market reversal indices signal. When a indices trend line is broken then it means that the momentum of the current indices trend is reducing & current indices trend might reverse and start moving in the opposite direction or form a consolidation stock indices chart pattern before it reverses.
Indices Trading Market Reversal Trading Signal
After stock indices trading price has moved in a particular direction for an extended period of time within a indices trend it reaches a point where it stops moving within the trend. When this happens we say that the trend-line has been broken.
Since the trend-line is the point of support or resistance then we expect the stock indices trading market to move toward the opposite direction. When this happens indices traders will close the open indices trade which they had bought or sold. This is known as taking profit.
Up Indices trend Stock Indices Trading Reversal
When stock indices trading price breaks-out upwards indices trend-line (support) stock indices trading market will then move down or form a consolidation pattern before moving downwards.
What is Upward Indices Trend Reversal in Indices Trading? - What is a Upward Indices Trend Reversal?
This upward indices trend indices trendline break reversal stock indices signal is considered to be complete with the reversal indices pattern of lower high is formed on the stock indices trading price chart. This also provides a trading opportunity to go short once the trend-line broken.
Down Indices trend Stock Indices Trading Reversal
When stock indices trading price breaks downward indices trend-line (resistance) the stock indices trading market will then move upward or form a consolidation pattern before heading upward.
What is Downwards Indices Trend Reversal in Indices Trading? - What is a Indices Trading downward Indices Trend Reversal?
This downward indices trendline break reversal stock indices signal is considered to be complete with the pattern of a higher low is formed. This also provides a trading opportunity to buy long once the downward indices trend line is broken.
NB: Sometimes when stock indices trading price breaks its indices trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the stock indices trading market indices trend direction reverses.
To trade this indices trend reversal setup as a trader once you open a new trade in direction of the trend reversal the stock indices price should immediately move in that direction, in a indices trading price break-out manner. This means that the stock indices trading market should immediately move in that direction without much of a resistance.
If on the other hand the stock indices trading market does not immediately move in direction of the stock indices trading price breakout then it is best to close out the trade because it means that the current indices trend is still holding.
Another tip is to wait for the trend line to be broken & for the stock indices trading market to close above or below the trend line so as to confirm this indices trend reversal signal.
What happens is that most traders open trades waiting for a reversal stock indices signal even before the current indices trend is broken, only for the stock indices trading price to touch this indices trend line & for the current market indices trend direction to hold and indices to continue with the current market direction.
Therefore, when trading this indices trend reversal setup it is best to wait until the stock indices trading price break-out has been confirmed by stock indices trading price closing above or below trend-line, depending on direction of the market.
- Upwards Indices Trading Market Direction Reversal -indices trend line reversal stock indices signal is confirmed once the stock indices trading market closes below this upward trendline, this should be the correct time to open a sell indices trade, so as to avoid a indices trading whipsaw.
- Downwards Indices Trading Market Direction Reversal -indices trend line reversal stock indices signal is confirmed once the stock indices trading market closes above the downwards indices trendline, this should be the correct time to open a buy indices trade, so as to avoid a indices trading whipsaw.
