These 3 factors are:
  • Market structure
  • Momentum
  • Support resistance
Market structure

The structure of the bull market is that the back high is higher than the previous low and, in contrast to a downtrend, there is a lower high below the previous low. If this structure is broken, it is a strong signal that the market structure is undergoing a transformation.

Moreover, the formation of the previous trend reversal structure is another signal that the market is likely to reverse the height.


The chart above is H4 EURUSD, the price is almost flat after a strong uptrend, but the market has created a bearish structure, at the same time the uptrend is broken and retested as shown for selling pressure at the threshold resist.

However, relying solely on the changing market structure does not enable us to participate properly in a new trend that is beginning. That means we need more confirmation. The next step we need to define is momentum.

Momentum

Momentum in an uptrend is characterized by a stronger upside wave than a decreasing wave, large distance to create a peak. If you see weaker upside momentum and strong bearish momentum, this is a transformation in momentum.

And in order for us to capture a new trend forming, for example, a downtrend like the one above, we need a bearish structure that forms with strong bearish momentum. These 2 factors show that the number of people participating in the trend has increased, so the trend has more motivation to move. At this point, your ability to trade in the trend will be more successful.


Still, on the H4 frame EURUSD chart, you can see the shift in momentum from strong up, then weakening momentum, and then strong downward momentum.

As you can see, EURUSD formed a bearish structure, and at the same time, it had strong downward momentum. These are the two key factors for us to enter this emerging trend.

Support resistance

If a new trend forms and there is strong momentum. But if you do not form an important resistance or support level for you to enter the trade, your chances of losing are still high if you insist on entering the trade.

Therefore, a new trend is forming, it is necessary to form a strong support resistance level so that we as well as other traders can participate in trading there. At the same time, supportive resistances are price areas that can provide more motivation for the trend to move more sustainably.


It is still the EURUSD chart, and the above figure shows that the market converges all 3 conditions, the bear market forms with strong momentum, and there are 2 strong resistances that traders can participate in trading.

These are the 3 important factors for us to evaluate a new trend forming and be able to enter into trading.

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