What's a Trend Reversal Signal?
Indices Trend Reversal Meaning and Definition of Trend Reversal
A trend reversal in indices trading is when the direction of prices change and start moving in opposite direction.
To identify this reversal setup traders use the trend reversal strategy of trendline break.
A trend reversal means that a up trend reverses & starts moving in a downwards direction & for a down trend reversal the down trend reverses and starts moving in an upward direction.
Because a trend reversal is a change in the overall movement of price and not based on the movement of one candles, traders use the market trend reversal setup to determine when the trend has been reversed.
Up Indices trend Stock Indices Trading Reversal
When price breaks-out below the upwards trendline (support) stock market will then move downward
Upward Trend Line Break - Indices Trend Reversal Meaning and Definition of Trend Reversal
This trend reversal signal is considered to be complete with formation of a lower high of the price. This also provides a trading opportunity to sell once the trend line is broken -indices reversal signal.
Down trend Stock Indices Trading Reversal
When price breaks above downward line (resistance) the price will then move up
Downward Trend Line Break - Indices Trend Reversal Meaning & Definition of Trend Reversal
This trend reversal signal is considered to be confirmed with formation of a higher low. This reversal trade setup also provides a trading opportunity to open a buy trade once the trend line is broken -trendline reversal trade signal.
Indices Trend Reversal Trading Strategy
After stocks trading price has moved in a specific direction for an extended period of time within a trend it reaches a point where it stops moving within the market trend. When this happens we say the trendline has been broken and this is interpreted as a trend reversal.
Since the trend line is the point of support or resistance and this point of support or resistance has been broken after a trend line break - we then expect stock trading price to move towards the opposite direction and this is interpreted as a trend reversal.
