This time, it is a story common to all stock traders, Forex traders, and cryptocurrency traders. When any trade has a big big turn, it’s hard to tell whether it’s up or down. When the power balance between buying and selling becomes even, a sharp ups and downs occur. This time, I will use the daily bar to introduce the shape of the chart when the trend changes. And I will also add when the trend change is likely to occur.
Equal buy and sell power balance
The chart below is the daily chart of GBP / JPY as of February 2022. The point to pay attention to is the area surrounded by the blue frame. As shown in the table of contents, when the trend changes, the power balance between buying and selling becomes the same, so it is characterized by violent ups and downs. By buying one day, selling the next, but buying the next day, traders don’t know where to go. However, this timing is just a sign of a trend change.
It is very easy to understand if you look at the daily schedule, but the following points can be raised as features.
- As the day changes, the top and bottom alternate.
- Up and down movement becomes intense in the same price range.
- I don’t know the direction of the big picture, up or down.
After a big sell (buy), there is a big full return
The chart below is the daily chart of AUD / JPY as of February 2022. The point to pay attention to is the area surrounded by the blue frame. As shown in the table of contents, one of the characteristics when changing the trend is that after a big sell (buy) is made, a full return or more sell or buy is made. This tendency is especially common when switching from selling to buying. In the case of buying to selling, it is rubbed and moved up and down many times.
Possibility of big loss if you do not keep up with the trend change
The timing of a trend change comes at some point, but not so many people can accurately detect it. The important thing is how quickly you can switch your eyes. When a strong sell comes in two or three times even though it is an uptrend, it is better to think that it is a sign of a trend change. If you stubbornly continue to fight in the same direction, you will lose a lot of money and it may be irreparable. Therefore, traders are required to switch quickly. If you don’t know the direction, you have the option of not trading at all. It depends on how shallow the wound can be to keep producing total plus in trading.
The trend change signal will be easier to grasp if you read the above points and the following articles together. The most important thing in trading is to never go against the big flow. It is important to know that even if a flow different from the big picture occurs, it is temporary and will eventually converge to the direction of weekly or daily.