3 Characters of Reversal Forex Market

In the world of trading, a trend is a representation of market strength. Trends are the most basic market conditions, so every trader must really be able to understand trends very well. Trends are always changing, so trends that develop in the market when trading can be both reversals and new trends.

An analytical approach based on technical analysis can help traders identify a change in trend direction or confirm a reversal. Traders are required to recognize a potential trend reversal for two reasons. First, when a trader opens a position in a trend, they are usually ready to get out of the trend before a reversal occurs. Second, a reversal is a moment when a new trend emerges. If traders are able to read market movements carefully and recognize them in time, traders will have the opportunity to enter the market (open deals) earlier and make more profits. These are the characteristics of the market will reverse:

Loss Momentum

Momentum is the strength of a trend. A trader should not only know about the direction of the trend, but also have to ascertain how strong the momentum or strength of the trend is.

When traders see an uptrend, don't rush into buying. Because, it could be a few moments later the trend reverses down, causing a loss. If a trader has already opened a sell position at the lowest price or buy at the highest price, then the trader's loss will be very large. That is why, understanding momentum is very important to estimate whether the trend is still strong or if it is weakening and will reverse.

Rejection

Rejection is a price action setup which indicates that the price will reverse (reversal) from its original movement. Rejection or rejection of a candle is generally a candlestick that has penetrated a level or area but its movement is rejected by the market so that the candle is closed with a wick or long tail. The longer the tail that is formed, the more likely a reversal will occur.

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