Video Transcription

Market Structure

A few of you is perhaps considering…

“But Rayner, this is just not as easy because it seems, because there are occasions once I see the market go up and down and proceed higher”

Here’s what I mean:

Is that this now in a downtrend, because we now have a lower high and lower low?

In a market structure, when the market is in an uptrend, you don’t all the time get a series of upper highs and better lows.

There are occasions when the market could make a pullback and inside the pullback, the market gets messy it forms a lower high and lower low, here is an example:

Most times the market can move higher after which go into a spread considering it’s going to be a reversal, after which it pumps and breaks out higher.

How will we know whether an uptrend is undamaged or not?

How you can Discover Trend Reversals Like A Pro

• An Uptrend is invalidated only after the worth breaks below the swing low (that precedes the breakout)

What do I mean by this?

Example:

The worth goes up and comes down.

After we talk concerning the swing low that precedes the breakout.

We’re referring mainly to a significant swing point on the chart.

These major swing points will be hard to come to a decision, for me I do know that is a significant swing point.

Latest traders can’t tell, so how will we know that’s a significant swing point?

You desire to take a look at where the market broke out that is what I mean:

Where is the swing low that precedes?

The word precedes means “before”

Where is the swing low that happened before the breakout?

You’ll be able to see the swing low that happened before the breakout.

In other words, this uptrend will likely be intact unless the market breaks after which closes below this swing low.

Until that has happened, we’d say that the uptrend remains to be valid and we expect higher prices to come back.

The uptrend is simply invalidated if it breaks below the swing low that precedes the breakout.

Example

Have a look at this chart over here:

The market breaks and closes below the lows.

Is the uptrend still intact or has it been invalidated?

Before everything, discover where the swing low precedes the breakout, that is what I mean:

That is the breakout point. That is the best point that we’re referring to, at this point, the market has broken out.

Where’s the swing low that happened before the worth breaks below this high?

That is the swing low:

You’ll be able to see that the market did break below this swing low.

At this point, that is once I will say that the trend isn’t any longer intact. It could go into a spread or reverse lower.

You’re now in a position to tell the difference between a pullback and a reversal.

A Powerful Trading Strategy That Works

It is a powerful trading strategy that I exploit to trade the market. This means that you can profit In a Bull and Bear market.

Example:

Have a look at this chart over here:

Market Structure

What’s the trend?

You’ll be able to see that the market is in an uptrend

Area of Value

Where is the realm of value?

For me, that is where I’ll draw it…

These are the 2 areas of value on my chart.

Why did I plot these two levels?

Because they’re the previous resistance.

The worth could come back to those areas.

Because at these levels, I don’t need to be buying at the worth points. If the market does reach these levels, the market might be in a downtrend, I don’t need to buy in a downtrend.

How do you must search for selling opportunities in a downtrend?

There’s no point drawing those levels because if the worth gets to it, the trend would have reversed and I’m not in search of buying opportunities.

Entry Trigger

The subsequent thing we’re in search of is a sound entry trigger to go long.

You’ve learned things just like the hammer and bullish engulfing pattern

On this case, the market got here into our area of value

Do we now have an entry trigger to go long?

Let’s discover!

Yes!!!

We now have a hammer and this tells us that the buyers are temporarily on top of things.

In case you understand the story behind this, you may see that the general market is in an uptrend. The market then makes a pullback towards the realm of value.

An area of value is where buying pressures could step in and push the worth higher.

What you may do is to go long the following candle open. Here’s what I mean:

This candle could be our entry.

Stops

We prefer to set it a distance away from the worth structure. At some extent where it’ll invalidate our trading setup.

I exploit the ATR indicator. I exploit the 20 SMA. What this tells you is that during the last 20 trading days, the market moves a median of 1.221/day.

To know where to set your stop loss, it’s good to discover the lows of the entry trigger candle and minus 1.221 from it.

The entry trigger candle low is 137.115

You’ll be able to see that the ATR Value is 1.221

137.115 – 1.221 = 135. 93

This will likely be my stop-loss level

135.93

That’s my stop-loss level…

Goal

Where do we would like to exit if the market moves in our favor?

I prefer to set my goal just before the resistance.

That is an area where sellers might come to push the worth lower.

For those of you who need to know what your R: R ratio on the trade, you should utilize this tool “Long Position”

Since you’re looking at a protracted trade. It should let you know what your potential R: R ratio is on this particular trade:

Because of this you’re risking $1 to potentially make $1.13.

Since this can be a cherry-pick chart, you may see that the market reached our goal and we exited with a profit.

Conclusion

On this guide…

I’ve shared with you the precise details of when a trend will reverse in addition to tips on how to trade it!

Nonetheless, here’s what you’ve learned today…

• Knowing if the uptrend is undamaged implies that the worth is consistently making recent highs but at the identical time has not broken its swing lows
• Timing the precise point of a reversal implies that the worth has broken below the swing low in an uptrend, and vice-versa for downtrends
• Using the MAEE formula by identifying the market structure, area of value, entries, and exit is a proven formula to identify and trade reversals within the markets

Now, over to you…

What are your experiences with regards to trend reversals?

Do you frequently find yourself on the unsuitable side of the move?

How do you intend to alter things up after this guide?

Share your thoughts within the comments below!