1. Price breaks the trend line

When trends form, they always create angles (usually defined by trendlines). High-slope angles are usually short-lived, then rectified, and usually stabilize at 30-45 degrees. When analyzing the slope of the trend we use 3 types of trend lines including:

  • The trend line has a steep slope
  • Trend line with average slope
  • The trend line has a slight slope

When price breaks out of a steeply sloping trendline, it's usually not a sign of a change in trend as price can easily be stopped at a medium sloping trendline, but it is also a sign signal that a trend reversal is approaching. When a small sloping trendline is penetrated along with support/resistance it is a pretty convincing sign that the current trend is over.

A broken inner minor trendline is a sign of a trend reversal, which is confirmed when a major trendline is broken.

2. Resistance - support

When trading trends or trend reversal Traders need to know the support - resistance levels around the current price, so that they can observe how the trend reacts to these prices. How important are they, this is related to: when price breaks these support resistance levels, how likely is the trend to continue or reverse?

3. Price pattern

The price pattern is a very good clue for you to read the possibility of the trend continuing or reversing. Possible patterns include: wedge pattern (up/down), two/three tops/bottoms, head and shoulders (down/reverse) pattern. When these patterns appear, Traders should not rush to jump into the market, but should wait for the next signals and combine with other factors to have the clearest judgment possible about the trend before going. order to decide.

The above example has a lot of patterns that you can observe such as: inverted head and shoulders (purple), forward head and shoulders (blue), double top (red line above), and double bottom (pink line below).

4. Divergence

Divergence occurs when prices make new highs (for uptrends) or new lows (for downtrends) but oscillators cannot do the same. Essentially, these oscillators measure price momentum so when a divergence occurs, there has been a decrease in momentum and this is a testament to the possibility of a trend reversal later.