WHY NEED TO RECOGNIZE THE TREND OF ISLAND ISLANDS?

It is actually trend traders who need this skill, not reversal traders. Because, as mentioned in some previous articles, most of the trend clingy brothers often buy at the top and sell at the bottom. That's why trend trading is dead as usual. In the uptrend, you BUY still have losses, in the downtrend SELL still has losses. Why is that, because unfortunately you already have an order at the end of the trend.

Identifying whether the trend is about to reverse or not will help us not to enter at the end of the trend, not to BUY at the top and SELL at the bottom.

This is the status of the new brothers starting trend trading. the very good uptrend, BUY ideas can be eaten, but ultimately still fail. So what signs tell us that a trend is about to end?

Signs tell a trend is ending

We have 5 signals happening in turn. If you encounter these signs, you have the right to doubt that the current trend is weakening and give way to a new trend.

  1. Shortening of Thrust
  2. Divergence
  3. Volume
  4. Price model
  5. Confirmed by highs / bottoms

SHORTENING OF THRUST

Shortening of Thrust means shortening the main wave. For a sustainable trend, the main wave should be strong and long. The posterior wave is equal to or greater than the previous wave.

However, if the following wave is gradually shortened and smaller than the previous one, it is a sign that the trend is getting weaker.

Specifically, in an uptrend, the uptrend is shortened (and at the same time longer) it is a sign that the uptrend is about to end.


As we can see, the last rising wave is extremely short and much shorter than the previous waves. So there is no reason for this uptrend to continue.

It was a mistake to enter here as the boost has run out.

DISTRIBUTION

Divergence is too familiar to the brothers. However, how to use it correctly is another matter.

You can use RSI, MACD, or Stochastic as you like. But understand its nature.

Use MACD.


As you can see, the MACD at the top has a very weak value, almost equal to 0. According to common sense, if the price can break out from the old peak, it must be strong, the MACD must be high, not very high, at least not. = 0 like this.

On the other hand, we consistently see higher highs while MACD tops are lower. Without a doubt, the uptrend is over.

VOLUME

Many traders believe that usable volume is not available in market. Because we do not understand volume.

In this example, the volume at breakout is extremely weak. breakout without force? So how to increase it?

Someone argued that, of course, the morning session does not have a high volume. But, in the morning session, the price has to sideways, there are not enough big boys to buy to push the price higher and cross the old high unless they want a bull trap to make a FOMO retail trader. Under that logic, we can fully believe that there is no bullish force in favor of a breakout.

PRICE MODEL

When the price model appeared, it was all too clear. There is no longer any discussion.

Obviously, the price hasn't risen, it has appeared a double top pattern. The uptrend has ended:


At this point, a new trader already knows whether to buy or sell.

THE ULTIMATE PIPE IS LOWER THAN THE FIRST PIPE - THE FOOTBUCH IS LOWER THAN THE FIRST

When this action appeared, the downtrend was clearly formed. Our action is only 1, that is to find the optimal point for SHORT SELL only.