reversal day trading

how to do reversal day trading ?

A reversal high day is a day in which the high price reaches a level higher than the previous high, and then reverses to close below the previous close. Like spike days, a reversal high day’s mirror image is a reversal low day, in which the market sets a new low before reversing to close above the previous close. Also like spike days, the significance of reversal days increases when there is a preceding uptrend (for reversal high days) or a preceding downtrend (for reversal low days).

While reversal days are widely watched and hence warrant attention from all traders, they are still prone to yielding many false trade signals. As a result, many traders who rely heavily on candlestick patterns prefer to see a reversal high day reverse to close below not just the preceding day’s close, but also the preceding day’s low. This signifies a strong reversal in the market, suggesting that sellers have taken control and that now may be a time to enter a short position.

The chart below illustrates how reversal day can be identified and what they can signal for traders who choose to incorporate them into their trading arsenal.

The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
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