Major Trend Reversals (MTRs) Flashcards
What do most reversal patterns involve?
TRs
What are the MTR Top Requirements?
What are the MTR Bottom Requirements?
What do most MTR reversals result in?
Most MTR result in a TR
Is this enough buying pressure to lead to a Bull Reversal?
No
In a Bear trend, if an MTR does not look right what should the Trader expect?
Expect a minor reversal into a TR or Bear Flag
In a bear trend, when there is not enough Buying Pressure in the last bull leg what should the trader expect?
Expect a minor Bull trend for the scalp. At best it is a Bull swing/Leg in a TR or a PB, not a trend
In a bull trend, when there is not enough Selling Pressure in the last bear leg what should the trader expect?
Expect minor Bear trend: for the scalp. At best it is a Bear swing/Leg in a TR or a PB, not a trend
In a Bull Trend of the MTR does not look quite right what should the trader expect?
The trader should expect it to be a Minor reversal into a TR or Bull Flag
Does a MTR often need several attempts before success?
Yes, it often does as most MTRs develop in TRs.
Do most MTRs lead to swing trades?
No most MTRs do not lead to swing trades; 60% of the time they will lead to a minor reversal with the remaining 40% of time they lead to big gains/winners
Here we have 3 MTR setups with one of them leading to a Big profit; the Wedge, LH MTR
Here we have 3 MTR setups with one of them leading to a Big profit; the Wedge, LH MTR
What is the most important reversal pattern?
The MTR is the most important reversal pattern. The MTR has a strong Trader’s Equation (Strong risk/reward ratio more than makes up for a low 40% chance of success)
Most Reversals have a variation in the patterns for the MTR
Most Reversals have a variation in the patterns for the MTR
What are the advantages of entering a probable MTR?
The advantage is the risk is small as the trader is entering early before there is a confirmed reversal, as the reversal comes only after there is a confirmed strong BO in my direction. The reversal is only a setup until the STRONG BO occurs
For a higher probability MTR, what do I need?
I need a strong BO from the MTR setup point
Strong Bear BO; still needs follow-through
Strong Bear BO; still needs follow-through
Why does a Bear BO need to fall below HLs of Bull Trend for Bears to gain confidence?
Once the market falls below a HL the Bears gain confidence and deem the Bull trend over and it is now in a TR or a Bear Trend
Why are these minor trend reversals?
Because the first break of the Bear TL was not particularly to strong so the reversals to follow may only be minor but still in-line with the premise of a MTR
Sell HH MTR or LH MTR? Depends on Strong Bear Leg
Sell HH MTR or LH MTR? Depends on Strong Bear Leg
Successful LH MTR; Sell Rallies
Successful LH MTR; Sell Rallies
In every MTR there is a 40% probability of a swing trade profit and after the BO in the MTR there is a 60% probability of a swing profit
In every MTR there is a 40% probability of a swing trade profit and after the BO in the MTR there is a 60% probability of a swing profit
Why is the MTR the best setup for Traders (beginners and Experts)?
If MTRs 1st Reversal fails what should I do?
Exit and look to Re-Enter
If new Signal; SELL AGAIN
If new Signal; SELL AGAIN
Usually the first time we get bars Below the MA the trend usually resumes
TRUE or FALSE?
TRUE,
1st MA Gap Bar(s) usually leads to the final leg of Trend, then MTR
All MTR Tops are simply Double Tops
All MTR Tops are simply Double Tops
What is the MAG Bar below the MA a sign of?
It is a sign of strong Bears and warning that bears might soon take control. Probably transition from a Bull Trend to a either a TR or a Bear Trend
This is what a MAG can do to ignite an MTR
This is what a MAG can do to ignite an MTR
a MTR needs two things, what are they?
a MTR needs CONTEXT and a good SIGNAL BAR
Are perfect DTs rare?
Yes the are very rare, The market does not perfectly have to test the exact same price to create a DT
Bull Trend, first reversal down is usually minor and leads to a TR (2 Lends down) and the trend resumes and then we get the MTR (LH/HH DT) and reversal down for a swing
Bull Trend, first reversal down is usually minor and leads to a TR (2 Lends down) and the trend resumes and then we get the MTR (LH/HH DT) and reversal down for a swing
What are MTR Bottoms?
They’re simply Double Bottoms
The principle is the same; the market is testing the low of the bear trend and Deciding whether to break out or reverse
The principle is the same; the market is testing the low of the bear trend and Deciding whether to break out or reverse
a DT MTR when does the probability increase for a profit?
Higher probability increases after a Bear BO
For a Reversal to occur in a Bull trend, what kind of signs do I need?
I need signs that the Bears are strong; traders have to believe the Bears are strong enough to control the market and take the price down
a Bear BO below a Bull TL needs what?
It needs Selling Pressure
Whenever there is a Trend, keep drawing Trend Lines
Whenever there is a Trend, keep drawing Trend Lines
DT or HH MTR what should I expect?
Expect a LH MTR and this LH is another opportunity too sell
What does MTR Bottom need to Reverse?
a MTR Bottom needs to Reverse…
- Break above Bear TL
- PB (Rallies) to or around MA
- I want the Rally to have signs of Buying Pressure.
- The rally needs to have signs of Buying Pressure
a Rally with very good Buying Pressure; just 3 Bull Bars can be enough.
*Remember the 1st reversal up is usually minor and the 2nd reversal up can lead to a swing trade
a Rally with very good Buying Pressure; just 3 Bull Bars can be enough.
*Remember the 1st reversal up is usually minor and the 2nd reversal up can lead to a swing trade
MAG Bar usually leads to a strong PB(final leg in a Trend) creating a MTR. Watch to see if it is a HL MTR / LL MTR / Perfect DB MTR, look for reversal signal bar than entry bar up
MAG Bar usually leads to a strong PB(final leg in a Trend) creating a MTR. Watch to see if it is a HL MTR / LL MTR / Perfect DB MTR, look for reversal signal bar than entry bar up
MAG in Bear Trend is a Sign of Buying Pressure
MAG in Bear Trend is a Sign of Buying Pressure
Strong Bear Trend; Keep Drawing Trend Lines
Strong Bear Trend; Keep Drawing Trend Lines
When I have a LL or DB MTR what should I expect?
Expect a HL MTR
What is every Head and Shoulders Top and what is the right shoulder?
a HH MTR is the top and the right shoulder is a LH MTR. Therefore every Head and Shoulders Top has a HH MTR and a LH MTR in it
What is every Head and Shoulders Bottom and what is the right shoulder?
a LL MTR is the top and the right shoulder is a HL MTR. Therefore every Head and Shoulders Bottom has a LL MTR and a HL MTR in it
Are Nested Patterns common in HST & HSB? (Head and Shoulders Tops/Bottoms)
Yes it is very common too see Nested Patterns in Head & Shoulders Patterns
MTR Bottom often has a DB
MTR Bottom often has a DB
Are MTRs often in Tight TRs containing DBs(For a Bear to Bull Reversal)?
Yes they do especially if it is in a Tight TR
What does a MTR Top have within it sometimes?
Often has a DT in. Remember every HST is a MTR; certainly, the right shoulder is a LH MTR.
Do all patterns Fail?
Yes they do and they fail often 40-60% of the time
DT LH MTR often is in a TTR
DT LH MTR often is in a TTR
DT HH MTR - DT in TTR
DT HH MTR - DT in TTR
When I have a MTR Top failing what does the market usually do?:
Usually, there is a MM and 2 Legs up
What do most Failed MTR lead into?
Most failed MTR lead in a TR or a Resumption of the current Trend
Failed MTR Bottom, I need to start the process over again for another potential MTR when it emerges in the market
Failed MTR Bottom, I need to start the process over again for another potential MTR when it emerges in the market
