TD POINT REVERSAL
In trading we continuously view the price action from different angles to collect as much evidence as possible about the direction and the trend the market is displaying. If we get 2-3 techniques giving us same indication, it will stack the odds in our favour.
One such technique which help me a lot in knowing the trend reversal is a technique developed by
Thomas DeMark. It is called
TD Point Reversal.
I am posting the same BNF 5 min graph to demonstrate this technique. For trend reversal to down , following are the steps :
1) Identify a Pivot high on the chart ( marked as PH )
2) Go back 4 bars and in the look back period of 4 previous bars find out a lowest close. ( 4 look back bars are marked as -1,-2,-3 and -4 ....minus sign is put to indicate previous 1,2 etc bars.Here the lowest close is in bar marked -3 )
3) If in next 4 bars after the PH bar, the market closes below the lowest close of 4 look back bars level, it is almost certain that the trend has changed to DOWN....
4) 2nd bar after PH bar closed below this level ( marked in red horizontal line ) thus confirming that the market trend has turned DOWN....
In today's market action many techniques such as trendlines, pivots, Oscillators,TD Point Reversal....all speaking in one voice that market trend has turned down and that stacks odds in our favour and give us confidence to go short in the market.....
Smart_trade