The Drummond Geometry Forum

what type of scenarios would allow one to anticipate trend reversal trading as opposed to anticipating cong. entrance then cong. action trading?

by trend reversal, i mean to say, in the fashion of a 'severe stair-step' move as opposed to cong. action where price action would, obviously, be contained within confines of congestion.

TR

Trend reversal is more likely when we see very strong support or very strong resistance lining up on a couple of timeframes above your focus timeframe and weak support or resistance opposing it, combined with a geometrical structute that gives sufficient space for a run in the opposite direction. That said, it is less common than congest/ congest action trading and I do not believe that it can be predicted with iron certainty, just that the possibilities are enhanced in the situation above... also more likely when following a major large-scale exhaust on several timeframes so that the following pldot refresh on say the weekly or monthly will drag the daily into a sharp trend reversal. Also, the Flow will be significantly different as the trend reversal deals with day two and three into exit as opposed to congestion action.

I also bounced this off of Charlie, and he adds the following comment ...

easy enuf. Start looking at daily or better still, weekly trend reversals, & see what on the higher time period, sets the stage for same, and compare that to when there is no trend reversal, and is there something common there as well, from the higher time periods.

thanks for your reply. i suspected this as being a prime scenario for this type of trading. i will back-check for further examples as per charlie's comments.

TR

You're welcome... seems like I always want and expect trend reversal trading, but of course it comes along relatively rarely....