Difference between Retracements vs Reversal taking in the context with 200EMA.
What is the Difference between a Retracement and a Reversal in a trend?

● A retracement is a technical analogy used to analyze a small pullback or change in the direction of a financial asset’s price, such as a stock, commodities, currency or index. Retracements are temporary in nature and don’t indicate a shift in the primary trend of the asset.
● They usually are opposite in direction and smaller as compared to their prior wave that is in the direction of the major or dominant trend.
● The retracements do not last long and are often exhausted at Fibonacci’s retracement levels of 38.1% or 50%.
● Combined with its crucial demand/supply (Trendline) levels and confirmed with technical indicators it gives a clear idea of whether it is a retracement or a reversal.
● Most of the healthy retracements never breach their primary trend. If the retracement extends below its critical support or resistance then it might indicate a trend reversal signal on change in the market structure. (HH-HL or LH-LL)

● A reversal indicates a complete change in the direction of the prior trend. Reversals are followed when an asset’s price fails to hold its crucial retracement’s support or resistance levels and extends the retracement and turns into a reversal.
● On confirming the reversals the traders try to exit their positions aligned in the direction of the trend prior to the reversal.
● Reversals are typically a larger price change in the opposite direction of the prior dominant trend.

● It is difficult to tell whether it is a retracement or a reversal when it starts to occur. We will have to wait for the confirmations taken in context with other technical tools and indicators to identify it as a retracement or a reversal.

How to enter a trade in the direction of the Dominant or Primary Trend by combining all price action tools?

● Identify the primary trend’s direction - Here the primary trend is down
● Wait for a retracement or consolidation within the current trend, look for chart patterns - Here in the above image, after continuing prior downtrend Triple Top Chart pattern is formed, which indicates an indecisiveness in the trend or a pause in the trend. A triple top chart pattern is s bearish reversal chart pattern.
● On breakout of the chart pattern, Confirm the chart pattern’s neckline break with a bearish reversal or continuation candlestick pattern. - Here a three-black crow, bearish reversal candlestick pattern is formed that confirms the selling pressure to continue in confluence with the breakdown of the triple top chart pattern.
● Now Combining all the above analogies we get to know the conviction of the trade is on the sell-side and should initiate the trade accordingly with position sizing.
● Confirm this price action trading setup with your indicators, for e.g using RSI, Moving averages and OBV in confluence will give you how long the trend may continue and so as you can et your targets.
● Targets and stop loss for any trading setup can be set according to Fibonacci extension levels, ATR, Market structure-based (HH-HL, LH_LL), percentage-based, Chart Patterns based targets, prior swing Highs or Lows, and trendlines in case the asset is trading at new highs or lows.

What is confluence trading in technical analysis?

Fibonacci
Volume
Trend analysis.

https://finwingsacademy.com/weekly-analysis/confluence-trading/

In a Volatile market, the chart don't break out. They break you.

So you have to be precise and experienced to handle the heat coming out during such situations.

If you’re broke, don’t be a trader.

Instead, get a job so you can pay the bills.

Then, you can learn how to trade.

This puts you in a position of strength as you remove “the need to make money” syndrome.

Doing this will 10x your chance of success.

This week will be highly Volatile.

Cues-

USA & Russia defense ministers meeting

From last 4 Days FII Continuously buying Index future, we can see a short covering rally.

Feb monthly expiry

Nifty trading in range of 250 point from last 3 days

Keep eyes on market and trade with small quantity. Follow your Risk management system.

Head & Shoulders Pattern -ENTRY Variations.

👆

https://finwingsacademy.com/weekly-analysis/how-to-identify-head-shoulders-patterns-on-charts-and-take-possible-trading-entries/

""A TRADER looks for consistent returns, but a GAMBLER looks for quick profits.""

""If you do what is EASY,

your life will be HARD.""