Market Structure The Series: Let's Learn Trend Change!
Hey, Steemians, it's so nice to meet you at the market structure discussions this time. We've discussed supply, demand, downtrends, and uptrends before. You can read the previous series at the selected link.
In this session, we will review trend changes, which are a very important part of market structure.
Imagine a market structure that is in an uptrend phase suddenly changing to a downtrend, but we are too late to anticipate it.
By knowing the trend change, we can anticipate it and even look for trading opportunities in the derivatives market.
Trend change, or what I call it change of character CoCH, is an early sign of a change in price direction in a market structure.
For example, if the market is in an uptrend phase and a trend change CoCH appears, this indicates that there will be a change in the price trend towards a downtrend.
When the CcCH trend change occurs, we need to be aware of a decline if we are in a long position in the derivatives market or spot market.
In the picture above, it can be seen that a lower low was formed, and then the price managed to penetrate the lower low with a bearish candle.
The most important thing to pay attention to is when a lower low is formed and the next price reaction.
If there is a strong bearish candle that manages to penetrate the lower low, then the price trend has changed CoCH
Keep in mind that the existence of CoCH identifies price changes. Usually there are several traders who, when CoCH occurs, immediately look for a Sell or Buy position for a trend change.
In the image above, we can see that a new low was formed, and this low was successfully broken through with a strong bearish candle.
However, the price continued a significant upward trend.
Then why can't this happen?
If we are observant in looking at the image above, it can be seen that the low formed is not like the low in the valid CoCH image above.
It can be seen that the low only acts as an inducement and is not a valid low that makes the price direction change.
Knowing that there are trend changes at the beginning, we can anticipate a market that could harm us.
However, if it is wrong to identify a trend change, it will also be fatal if we rush to enter a position, it might not be a valid CoCH.
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This is a nice analysis post but your work will look better if your images were in landscape not portrait form
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Thanks, guys, for the feedback.
I will try to use landscape images when using a PC in the next review.
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