What is Indices Trend Reversal in Indices Trading?

Definition and Meaning of a Indices Trend Reversal and How to Trade a Indices Trend Reversal

In indices trading the indices trend line break signal is used to signify a stock indices market reversal indices signal. When a indices trend line is broken then it means that the momentum of the current indices trend is reducing and the current indices trend might reverse and start moving in the opposite direction or form a consolidation stock indexes chart pattern before it reverses.

Indices Trading Market Reversal Indices Trading Signal

After stock indexes price has moved in a certain direction for an extended period of time within a indices trend it reaches a point where it stops moving within the trend. When this happens we say that the indices trend line has been broken.

Since the indices trend line is the point of support or resistance then we expect the stock indexes trading market to move towards the opposite direction. When this happens indices traders will close the open indices trade which they had bought or sold. This is called taking profit.

Up indices trend Indices Trading Reversal

When stock indexes price breaks upward indices trend line (support) the stock indexes trading market will then move down or form a consolidation pattern before moving downwards.

What is Upward Indices Trend Reversal in Indices Trading? - What is a Indices Trading Upward Indices Trend Reversal?

This upward indices trend indices trend line break reversal stock indices signal is considered to be complete with the reversal indices trading pattern of a lower high is formed on the stock indexes price chart. This also provides a trading opportunity to go short once the indices trend line broken.

Down indices trend Indices Trading Reversal

When stock indexes price breaks downward indices trend line (resistance) the stock indexes trading market will then move up or form a consolidation pattern before moving upwards.

What is Downward Indices Trend Reversal in Indices Trading? - What is a Indices Trading downward Indices Trend Reversal?

This downward indices trend line break reversal stock indices signal is considered to be complete with the pattern of a higher low is formed. This also provides a trading opportunity to go long once the downward indices trend line is broken.

NB: Sometimes when stock indexes price breaks its indices trend it might first of all consolidate before moving in the opposite direction. Either way it is always good to take profit when the stock indexes trading market indices trend direction reverses.

To trade this indices trend reversal setup as a indices trader once you open a new trade in the direction of the indices trend reversal the stock indexes price should immediately move in that direction, in a indices price breakout manner. This means that the stock indexes trading market should immediately move in that direction without much of a resistance.

If on the other hand the stock indexes trading market does not immediately move in the direction of the stock indexes price breakout then it is best to close out the trade because it means that the current indices trend is still holding.

Another tip is to wait for the indices trend line to be broken and for the stock indexes trading market to close above or below the indices trend line so as to confirm this indices trend reversal indices signal.

What happens is that most indices traders open trades waiting for a reversal stock indices signal even before the current indices trend is broken, only for the stock indexes price to touch this indices trend line and for the current market indices trend direction to hold and indices to continue with the current market direction.

Therefore, when trading this indices trend reversal setup it is best to wait until the stock indexes price breakout has been confirmed by stock indexes price closing above or below the indices trend line, depending on the direction of the stock indexes trading market.

• Upward Indices Trading Market Direction Reversal - indices trend line reversal stock indices signal is confirmed once the stock indexes trading market closes below this upward indices trend line, this should be the correct time to open a sell indices trade, so as to avoid a indices trading whipsaw.

• Downward Indices Trading Market Direction Reversal - indices trend line reversal stock indices signal is confirmed once the stock indexes trading market closes above the downward indices trend line, this should be the correct time to open a buy indices trade, so as to avoid a indices trading whipsaw.