retracement or reversal

[price777999]

How can you tell a retracement is not gona be a reversal :?:

 

[foredog]

you can't really until it stops retrace or keeps reversing past the original point..

wait for confirmation, don't guess

 

[Shanghai]

Yes wait for confirmation. If you think it will be a retracement and then continue along the main trend only enter the trade when price has exceeded the previous bars close or high for example (long trade of course). Wait for price action to confirm before you enter.

 

[barjon]

How can you tell a retracement is not gona be a reversal :?:

you can't - but you can make an assumption and get out quick if the subsequent price action doesn't support the assumption that you made.

good trading

jon

 

[mr.marcus]

....all i hear is "you cant"....all grey and db ever spouted was what was "not" possible...easy to avoid our own failings by projecting limits onto others..what people really mean is THEY CANT.

 

[bbmac]

In respect of tech analysis being useful in determining whether a retrace/pullback may turn into an absolute reversal, what may be useful is the following

1. How many time frames does the trend extend on?
2. What is the character of the trend in terms of it's pullback's are they historically deep or shallow?
3. What do you think was the strength of the support / resistance that gave rise to the puullback, what happened when/if price was last at this level?
4. Are there any technical conditions at the top/bottom of the trend prior to the pullback that may suggest a reversal or at least a deeper pullback, like oscillator extremes or divergence for eg?
5. Where is the broken support/resistance that may act as potential resistance/support now in a pullback, and is there any confluence there with fibs etc..?
6. Are there any technical conditions like hidden (reverse) divergence that suggest a re-entry to the trend at such a pre-identifies sbr/rbs area might be a good play?
7. What is price's relationship to to intraday/intraweek/intramonth pip range averages at the point of pullback?

and finally

8. Are there any specific fundamental factors driving the trend?

G/L

 

[tomorton]

I don't believe you can tell what will be the outcome at the start of the move but statistically, if the starting point is from a well-defined and well-established trend this will more often be a retracement.

 

[rathcoole_exile]

How can you tell a retracement is not gona be a reversal :?:

stop and think about it. surely this is one of, if not THE, most fundamental questions regarding trading.
if it were in any way easy or predictable to determine one from the other then trading wouldn't even exist - it would be so simple as to remove all meaning and purpose.

It is the fact that you cannot determine whether its a retracement or a reversal that creates the market forces to allow you to trade.
All you can hope to do is have an edge, via risk control and money management 'cos even if Soros or Buffet or anyone of thousands of profitable professional traders looked over your shoulder at a chart and said, "hmmmm, i think that's a retracement, i suggest you go long/short now", they could still be absolutely 100% wrong at the very next moment !

nobody knows - that's the beauty of it !