Reversal Setup

PARAMETERS

Price is below long-term moving average and is attempting to reverse, showing some strength.

EXAMPLE

This is the 4h chart of INJ. As you can see it's been trending lower for quite a bit (some coins will be downtrending for longer / shorter). It then proceeds to show some strength, indicating a reversal might happen. The arrow is where KreiosLabs would have flagged this coin as reversal.

INJ 4h Chart

REMARKS

Sometimes, when coins get flagged as reversal they seem to be "too high". My advice is you can either buy it there or wait for a retracement - you can use whatever strategy you want here be it placing a limit on the nearest fair value gap (FVG) or measuring a Fibonacci retracement and placing a bid there. At the end of the day, it's all about tradeoffs. Some coins won't give you a retracement and some will do. Alternatively, advanced users can use reversal in combination with a different setup in the higher timeframe. For example, using a 1h reversal to anticipate 1D momentum/pullback setup. More on this in the future.

I personally never trade reversals on its own unless they appear somewhere else in higher time frame.