How to use these reversal patterns regardless of what you trade

by , 03 November 2015

Trading with the trend is one of the best ways to make money from the markets. But trends don't continue forever. There will come a time with a trend reverses.

This is where reversal patterns come in. They work well with shares, forex, indices and commodities.

So how can you spot a trend coming to an end?

Read on to find out…


The importance of looking for the end of a trend

 
There are a number of reasons why you should keep an eye on a trend coming to an end. 
 
You may have a trade on that’s in the money. If the trend reverses, you could lose the profits you’ve made from your trade.
 
You also don’t want to put on a new trade when a trend is about to end.
 
By being able to spot when a trend is ending or about to change, you can exit your trade and preserve your profits.
 

What patterns can you use to spot the end of a trend?

 
There are many different reversal patterns, Frank Hemsley in Profit Watch explains. 
 
The most common ones for uptrends include the head and shoulders pattern and the double top pattern. 
 
Both of these patterns indicate that an uptrend is coming to an end and a new downtrend is starting.
 
The most common ones for downtrends include the inverted head and shoulders pattern and the double bottom pattern. These both indicate that a downtrend is coming to an end and a new uptrend is starting.
 
By using these types of patterns, they also give you precise target prices to use which come from the formation of the pattern. Trading these can be very profitable.
 
The important thing when using these types of patterns is you need to be patient and wait for confirmation before trading. You want to ensure the trend is changing before risking your money on a trade.
 
So there you have it. How to use these reversal patterns regardless of what you trade.
 
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