Identification between trend reversal and retracement?

[sheetal]

Hello friends,

 

Very often, I find myself confused while making a trading decision under this circumstance - After a good move, the price retraces upto certain level or let's say there's a pullback. Now, let's say under the present situation in the chart below (an example), what would be your decision?

 

http://i43.tinypic.com/moo5f.gif

 

How & why would you personally decide if you would close your long position and initiate a short or simply hold your long trade?

 

 

Thank you

Edited April 2, 2010 by sheetal

[prashant_trader]

you can go through Michael Parson's Channel surfing to arrive at a conclusion, as long as price is within the channel, it is

within the trend, and as soon as price has travelled above or below the channel, is indicating current trend is over.

[learningfx]

Hi

On top of prashant_trader comment, I might add bollinger band and use candlestick pattern (at key level or confluence)

to judge whether the trend is over or reversing.

[barbara1713006084]

Or look Mcdady's (Macdbay) videos about price momentum :) .. he would say definitely UP UP UP (pullback) :D

http://indo-investasi.com/showthread.php/4660-McDaddy-Trading-course-Price-Behavior?highlight=macdbay

 

Barbara

 

p.s. BTW this is not the place to enter the trade (your sell)

Edited April 4, 2010 by barbara

[wah_castle]

sometimes it is very hard to decide

[radicaltour]

i urge you to please take a look at Bill McLaren's "Foundations for Success" (videos). I've watched a lot and i must say his videos are excellent regarding understanding of trends...

[sheetal]

i urge you to please take a look at Bill McLaren's "Foundations for Success" (videos). I've watched a lot and i must say his videos are excellent regarding understanding of trends...

 

Hi radical,

 

Where could I find them? Because I often get confused & nervouse while entering in a retracement.

 

Anybody, could please provide some insights?

 

Thanks

[⭐ Gambler67]

Hi Sheetal,

 

I do not know if you have your answer to this question yet, But your question is quite genuine and does create quite a predicament in deciding to trade or not. How ever what I do is to use look at the same chart in two higher time frames and decide if it is a reversal or a retracement. i hope that helps.

[anton1713006147]

Hi prashant_trader,

 

Would you please to share Michael Parson's CHANNEL SURFING?

 

Thanks in Advance,

Anton

 

 

 

you can go through Michael Parson's Channel surfing to arrive at a conclusion, as long as price is within the channel, it is

within the trend, and as soon as price has travelled above or below the channel, is indicating current trend is over.

[traderx4]

This is where you would pull out your fib tool. I dont know how long you've been trading, but I would look at that chart straight away and go long providing one of the fib lines meets the pullback and dont forget money management if you were wrong!

:-)

[MacGyver7]

If you're not sure, if it's a trend change or a retracement, why not wait for the 2nd entry signal in the new trend direction, and just skip the first trade?