Price tends to go on the same direction of the force.
You should never go against signs of force.
When you see force appearing on the opposite direction of the trend be careful!
It’s like when you have a ball coming to you, and you give it a big kick to the other side, the ball will change direction.
If you see the price showing strength against the previous trend, that’s because it hit something that made it change direction.
How do I detect those signals of trend direction?
Look at this example:
What happened there:
- The price was going up on a beautiful up trend.
- At some point a big red bar appeared.
- That’s the biggest red bar that you can see on the chart.
- Erasing a lot of green bars.
- Erasing a lot of the up movement that the price did on the last candles.
When you see a powerful signal like this, always be careful.
The trend will much probably change!
What should I do when I see this on my charts?
You don’t have any open trades:
That’s a good place to start to look to take trades on that new direction.
Wait for a setup on that direction and go with it.
Catching trends at the beginning, and riding them, can make you a lot of money!
You have open trades on the opposite direction of the recent strength signal:
It’s probably a good time to close your trade.
The price will much likely start to go against you making your profits disappear.
It’s better to close the trade and wait for a new signal of strength on the direction that you are trading to open it again.
Meanwhile you can just ride that opposite trend and make money on both directions.
There are other ways of detecting trend changes. I teach them all to my traders.
But this is a very powerful and profitable way to do it.
Just don’t miss it on your charts.
Me and my traders never miss this opportunities at “Living From Trading”.