Price Action Reversals - Part 1 - Introduction - by Nigel Price

Price Action Reversals – Introduction – By Nigel Price

The PAST Strategy relies on two steps: 

  • First, we identify a potential market turning point on a longer “anchor” timeframe, usually the daily chart and above;
  • Second, we use trend lines to manage our market entries and stop-losses.

In the following short series we are going to look at the first step, identifying market reversals on larger timeframes. We are going to go back to candlestick basics!

The greatest strength of candlestick patterns, I think, is identifying areas where price might be beginning to contemplate a change in direction.

If we practice reading some simple candlestick patterns, we should be able to identify markets that are showing signs of changing direction – either perhaps putting in a bottom ahead of a period of rising prices, or putting in a top ahead of a period of falling prices.

We can use these changes in market direction to generate great trading opportunities.

It is important to remember – we don’t need to be able to consistently predict the future with these signals. No candlestick pattern or any other form of technical analysis can do that.  So just relax, it doesn’t matter if you don’t feel that you are very good at it to begin with.

[notify_box font_size=”15px” style=”blue”]All we need is an indication of what might be about to happen. That is a good enough place to start.[/notify_box]

Let’s get going and start by looking at The Preceding Trend