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Figure 17 The bearish reversal bar seems much more significant (figure 17) when the market has been moving up as it indicates the possible end of the current up trend. 40 In the following example (figure 18), the market has made a clear move up and a bearish reversal bar has formed (the bar highlighted in red). This high of 5336 turns out to be the high of the day. Figure 18 Action: This time when you trade with Market Master, look for the market to make a clear move, either up or down, and look for evidence of a shift in control. You can either choose to trade aggressively and trade as soon as you identify a shift with a close stop loss; or you could be more conservative and enter a position with a stop a tick below the low, or above the high of the reversal bar. 41 Chapter 8: Volume Volume in a chart is useful for identifying turning points in a market. Consider a falling market; in order for the trend to reverse from down to up, conditions have to change. In a down trending market sellers are in control (overall), and for the market to turn buyers need to take control: buyers have to come into the market in sufficient quantities to overwhelm the sellers. When buyers come into the market, sufficient to overcome sellers, the volume will increase. An increase in volume does not always coincide with a turning point in the market, and an increase in volume does not always mean the market is turning; but often times, when a market has been moving in one direction, and there is a significant increase in volume, it signifies a change in the balance of power. A change in the current balance in power signals a turning point in the market; or if not a significant turn, a pause at least. 42 |
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