Price Action Trading For Beginners: How to Trade Reversals | Trading Tips

all right reversal trading can be very tricky and very hard and this is what i'm going to show you in this video how to successfully found a concentrate entries and how to find a reversal pattern because a lot of traders get you know they get trapped fairly quickly trying to predict a reversal and trying to recognize when the current trend is over and the new trend is starting out and there are three key factors or three key rules that we need to follow when we are trying to identify that the trend is reversing and we

are looking for a reversal pattern because when we are reversal trading we just don't want to blindly pick tops or pick bottoms we actually want for market to prove us to tell us that the trend is reversing successfully and there is no more bears in this particular instance because we're talking about downtrend are left in the market so what we are going to be looking for is reversal pattern so the first rule and the first key factor that we are looking for is that we need to recognize that the current trend is over and that

is trend line rules the second key factor is there has to be two failed attempts in the direction of the current trend and the third rule is we're going to be using the ema exponential moving average 21 bar it is 21 bar ema so if you're new to trading just set up the 21 bar ema this is going to be helping us give us additional information about the reversing pattern so let's start up the first rule is the trendline rule and trend ryan rule is telling us that after a break of a trendline there is

most likely going to be a retest of a new low so you can see the trend line i've found right here you can see the downtrend we're making lower highs lower lows the ema is pointing down the trend line is fitting from the lows and from the highs so when the trend line is active we cannot be looking to buy we cannot be looking for country trend entries by any means we need to stick with the trend because the trend is your friend you know we've all heard this millions of times where we have a

first break of this downtrend working lower but that doesn't mean we're going to go long here no the trend line rules is telling us that after a break there is most likely going to be a retest of a new extreme and this is what happened here so after break of a downtrend of this trend line working lower we have a new extreme we have a new low okay so now we can potentially be looking for at least correction or possibly a full-blown reversal but we just don't want to still keep buying because it is impossible

to pick bottoms like this anything can happen it can easily take one thing higher and go back down and you know we would have gotten stopped out nobody can pretty much predict whether to go long here what we need to wait is for higher probability setup higher probability reversal pattern and here comes the second rule two felt attempts in the direction of a trend so when this new low exists what we are looking for is second entry short that is going to fail this is a new low pullback working up higher first century short this

is the first entry by the bears trying to push the market lower and they're trying to see whether there are still sellers left in the market because just because we have a break in a new low there still might be some people looking to sell so this is just the first entry but we want to wait for a second entry why you want to wait for second entry because it's just a human psychological thing once we make something attempt to do something if it doesn't work once we will actually attempt to do it again we

will kind of confirm it if it really doesn't work and after it fails again we will stop doing it forever and this basically you know translates into trading as well so we have a first century short pullback second entry short now we have a two felt attempts by the bears to re-test whether there are any sellers left in the market and they are not the bulls are active so this is the second factor of looking for a reversal pattern and third factor is using the ema what we are looking for with using the ema when

it comes to reversal pattern we are looking for prices to go through ema and then ema serving as a stepping point stepping stone for prices to react to so we have a first entry short second entry short we spiked through ema you can see how ema is holding prices nicely and it's not letting the bars to finish and in in addition here we actually have a short return trend line that is supporting our decision so this is a this is basically how reversal pattern looks we are working lower downtrend we have a break and a

new low now we can be expecting a potential reversal pattern first entry short we're going through ema second entry short good is cma holding yes ema is still holding and we have the trend line now market is telling us that bears have abandoned their decision and both are jumping into the market and we want to jump with them and don't worry i have prepared a lot more examples for you guys i have quite a similar example right here we have a downtrend working lower you can see how neatly prices are fitting in you can see

that ema is pointing up lower big time we are clearly in a downtrend we have a first break of this downtrend but we don't want to take the kind of trend trend entry yet we don't want to pick blindly big bottoms you never know if it's going to work or not we have to wait for wait for new extreme and we have break new extreme another lag to a new extreme okay so now we can potentially be looking for a reversal pattern we have a new low right here prices are working up higher first attempt

to bears to test whether they'll sell us in the market and there and it fails we shut through the ema second attempt by the bears and it failed nice big bullish bar and notice how ema is holding prices and once again the trend line in this case is holding prices and this is opportunity for us to start trading in the opposite direction now if you look at the right side of the chart this is what it would look like the downtrend on the left side first century short second entry short we go through the ema

and ema is holding prices this is a reversal pattern failed second attempts reversal pattern and not every time which i'm going to illustrate you guys not every time the ema we go through the ema so nicely like here this is the best scenario when the ema is putting no resistance whatsoever this is how you can trust the reversal pattern really well but i'm going to show you that a lot of times the ema is putting a little bit of a resistance all right here we have on the chart and bullish uptrend the series of higher

highs and higher lows ema is pointing higher the trend line is fitting prices neatly you can see this is a valid bullish uptrend so we are looking only for longs no country and trendies trade entries for us yet whatsoever we have a first break and a new high okay so with the new high right here the rule of a trend line after new break is going to be a new high most likely now we can be expecting a correction at least correction or possibly a reversal so we can see we are working lower working lower

we didn't take it higher here first century long and nothing happened we keep we we kept going higher and kept going higher so no reversal pattern right here we cannot pick any short none of this is a reversal pattern this is just a first entry and it worked it keeps going higher okay so we have a double bond double top right here we're working higher okay okay we pushed through the ema a little bit good first entry long failed second entry long failed big bears reversal bar this is good this is a two felt attempts

by the bulls to see whether there are still bulls in the market ready to rally up market higher because you can tell that you can see that here the booths were still active in the market and they were still looking to go long after this double tap nobody was willing to go long and you can see first century long second entry long failed at least for this particular time period so this is two felt attempts after break and a new extreme and you can see how ema now is putting a little bit of a over

a resistance but the important thing is that the we still manage to go through ema it's not like here when ema is not letting prices to close below we actually close below every single time and this is important for us and quick easy scalp reversal pattern right here we have a bullish option working up higher once again series of lower higher lows and higher highs trend line is fitting nicely you can see first break of this bullish trend line so what's going to happen most likely a retest of a new extreme two likes to a

new extreme and now we can be looking for a reversal pattern pull back first entry pull back second entry beautiful slice through the ema basically like hot knife like a knife through a warm butter this ema is putting no resistance whatsoever we go through ema second entry long two failed attempts in the direction of a previous trend two felt attempts ema is rejecting prices trend line is rejecting prices this is all we want to see and only now we can go short only now this is a valid proven reversal pattern that is to keep telling

us that bears are now in the market and you can see it doesn't apply just for the bigger patterns just not for the major patterns during the day it applies even for the shorter term ones because we have this dungeon working lower we have a break and a new ho new low and you can see we made a double bottom right here so we have a break and a new low okay our first rule is matt the downtrend is played out first century short second entry short failed the second rule is played out you can

see the ema put a little bit of resistance here and put a little resistance here but the important thing is we are keep making above the ema we still close big bullish bar and close way above the ema and the trend line is holding at this point so once again first century long second entry long after a break and a new extreme and here you you can if you're experienced price action trader you can tell that we have a double bottom right here which adds even more fuel to the power to the fire right here

so but this is just to see that not every reversal pattern is clean like this this is what we want to see spike through ema like it's not even there here a little bit of resistance but nevertheless it is a reversal pattern nonetheless and once again we have a trend line working up higher we have a break and a new high so now we can be looking for correction or reversal pull back first century long pull back second entry long two legs two legs down because market moves in twos it is off the trend line

and ema is holding prices first century long second entry long you can see that our scalp would have gotten we we were gonna we would have gotten trapped here just to see it to go exactly where we thought we were gonna go but the key regarding this lesson is to recognize reversal pattern and this is a reversal pattern first century long we managed to go through ema second entry long ema is holding trend line is holding we are working lower from this point on and here we have a downtrend series of lower highs lower lows

ema's pointing lower trend line once again is fitting we need to pay respect to the current trend we don't want a content trend whatsoever until we have a proven break and new low and even then that's not enough we need to wait for a reversal pattern so we have a break right here and we went into this consolidation into this trading range so we don't want to be looking for a longs we should be looking for shorts because we probably gonna go if you trade it down lower you want to be looking for shorts we're

probably going to go go lower we're probably gonna break in the direction we traded into the range but nevertheless this is the new low because this low is still higher than this low so this is not a new low this is a break and a new low we only managed to make the new law after such a long time that happens new law right here pull back first entry pull back we crawl through up the ema second entry big bullish reversal bar two failed attempts ema is holding we have a break and a new law

of current downtrend so current downtrend should be over and the trend line is holding reversal pattern now we can try to pick bottoms we're working up higher we have a break new high we don't want to pick top just like that first century long pull back pull back we spike through ema good second inch long here we want to go short and take our scalp first century long second entry long after this correction has played out so hopefully you guys are staring starting to see the pattern how to look for reversal patterns and that we

just don't want to keep looking for counter-tension entries just picking tops or picking buttons we have to stick to the rules and we have to pay attention to what the price session is telling us just like here big bullish uptrend don't try to sell this at all just keep looking for lows we have a break we have a little bit even though even though we have a little bit trend down we still don't want to be thinking shouting and why because we don't have a new high you you can tell say that this is a

potentially new high but this is so close i i might i might have my trendline just a little bit to the side this is so close that a lot of traders probably didn't even took this into consideration that this may be a new high and eventually they needed a bigger proof the clear new high so even though we have a current downtrend working lower this is just a correction we cannot short this because this bush uptrend is still in play we have a break new high right here and now we can finally be looking for

potential country and trend entry but not any other entry reversal pattern entry first century long pullback second entry loan two failed attempts to go higher ema is holding prices we went through ema and the trend line is holding prices you can see we went a little bit shy here you could have waited trend line is holding prices now now is a good place to go short all right i have another example to you for you how you can recognize a reversal pattern we have a bullish upturn working up higher clear uptrend higher lows higher highs

trend line is fitting very nicely you can see that this trend line is valid this is how you can tell the trend line is valid when it fits from the highs as well as from the lows not just from the lows you you need to fix from the highs as well two legs we have one leg second leg marker moves into this is a break first break new high okay now we can be looking for a reversal or potentially for correction or potentially reversal ema is holding resistance boom ema is holding resistance we cannot pick

tabs here because ema is still keep telling us that there might be bulls in the market we don't want to go long either because we already already have a break and a new high so in this situation the best thing is just to sit on your hands and wait for reverse a pattern because we don't want to go long because we have a breaking new high and we don't want to go short because we are not going through ema new high right here first time we we went through ema okay so now we can start

paying a little bit more attention first century long pull back second entry long reversal pattern failed uh the secondary long failed and we have another example right here let me see if i can find the trend line right here just copy it pull it over we have this big channel working up higher you can see this is an uptrend ema's pointing higher we went into a little bit of a little bit of consolidation we have a failed break lower we have felt break lower first break of this trend channel line working up higher break new

high right here so right now we should be expecting correction or possibly a reversal first century long second entry long but look at this key entry point ema putting resistance holding prices the bullish momentum is still up so no reversal pattern for us let this we need to let the bulls to still because there's going to be a lot of bulls that are still trying to attempt to go along and we need to let them do this the balls are running up market higher higher we made it once again new height right here so let's

start let's try again what we try to do here let's do it right here once again first century long now we're moving through ema this is exactly what we want to see not like here ema putting resistance here no current junction entry here ema is going through ema prices are going through ema here good fell second entry long right here first century long fell second into long two felt attempts in the previous trend direction ema is holding prices serving as a stepping stone stepping point stepping stone and the trend line is holding prices this is

a reversal pattern we can go safely short now and we can now safely assume that the bears are starting to have more buying power more selling power because and you could make a case that picking tabs like this you can you can make it work and you can be a winner sometimes but what i'm trying to teach you guys is to find the highest probability setups as possible and to be as consistent as possible because yes you can pick a lot of tops and a lot of bottoms and successfully you know concentrate them you know

successfully but it's a in the long term in the long run that's a losing strategy because it takes just a few of these trades and you're going to wipe out all of your account because you're probably going to keep moving your stop back and back further back or just even though even just picking tab just doesn't work because you could have went short like right here and look at how tempting this was tempting this look you can go show right here boom felt all right i'm going to go short right here the market is definitely

reversing now trapped once again okay i'm going to go short look at this bull bearish pin bar definitely reversing now boom trap so you don't want to be trying to kind of turn trend you need to be looking for the reversal pattern when when the bears are actually telling you that they are now ready to sell and their intentions now are valid and i just want to show you guys once more that the finding a reversal pattern that this strategy is not just for the bigger bigger patterns during the day because yes that works the

most and this is what we want to find the most to find the bigger the bigger trends how they are going to reverse this is the most important for us but it works for short-term trend lines as well because we have a trend line working up lower we have a break and a new low so now first factor key factor is math we spike through ema right here first central short pull back second entry short felt big bullish reversal bar e trend line is holding ema is holding reversal pattern we're working up higher this bullish

trend is now working up higher creeping off the trend line we have a first break of this trend line we are looking probably to make a new high right here and it did happen 2 lakhs to a new high now we can be looking for a reversal pull back first entry ok we go through ema pull back second entry ema rejecting prices nicely in our direction trend line is holding reversal pattern now we can go short we have a break new low and a new low right here now we can be this is starting to

look like a trading range so now it's obvious that we're swinging up and down up and down i just want to say that when if it's looking like a trading range picking tops and picking bottoms is a valid strategy but only in trading ranges but that's not the point of this video i just want to show you guys to focus on reversal patterns we have a break new law of this downtrend working up lower we have a new low first entry ema is putting a little bit of resistance but look at this bullish reversal bar

okay we actually went up higher second entry big bullish reversal bar a lot of stem at the end this is what we want to see and the ema is holding prices we close above it trend line is holding prices failed two attempts in the previous trends direction reversal pattern this is what we want to see we don't want to go along here we want to go along here after the proven reversal pattern this is what we want to see so if you got any comments about a reversal pattern just put them in a comment section

and i will get to them hopefully and don't forget to like the video if you actually enjoyed it anything this was insightful to you and if you are interested in learning price action feel free to subscribe to the channel i see you guys in the next video bye guys