April 23, 2016
Moses’s Analysis
We saw ^STI was forming higher high, we guess Straits Times Index is begin to enter the reversal; change in direction. True or true?
Reversal vs Pullback
Let’s understand reversal vs pullback, a trend reversal means the market is changing from one direction into the other, or the market is changing from one behaviour into the opposite behaviour. It may be easier for some to understand that the market is changing from a bear trend to a bull trend or vice versa. While pullback is only a shorter term in change of direction.
However, one very important point to note, every trade placed by a trader there is a equal and opposite trade placed by other trader. Therefore, the trader places a trade base on his belief to move north, and at the sametime another trader place a trade in the opposite direction belief the market will be moving south.
Therefore, whether the trend will continue or reverse depending on which force are stronger.
Timeframe
A single candlestick of a pullback, such as in an one day chart, may mean eight candlestick of reversal. It is important to look at higher timeframe to confirm the reversal or pullback.
Reversal is an attempt to make a breakout fail.
Think!
Think! It is breakout, when the candlestick is making a higher high of the last one, or the candlestick is making a lower low. When the candlestick fail in breakout, then it is into a reversal or pullback.
So, is it important that ^STI has changed direction. Are you a position trader or just trading? Buy or sell to make money.
Thanks for visiting the site, you can find many other analysis and concepts on this site. Have fun!
Moses Stock Analysis and Scan
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