FX pullback Reversal Indicator is a trading system based on multiple moving averages. As the name suggests this trading indicator helps traders to trade high probability pullback reversal areas.
FX pullback Reversals Indicator Overview
In this trading System, Moving averages are applied on higher time frames and plotted on a lower time frame to identify the end of a pullback with deadly accuracy. Let’s try to understand the working of this system with few examples.
Moving average is simply a technical analysis tool that calculates the average of price data and plots a constantly updated average price on the chart. When price moves above the moving average and shorter time frame moving average is above the longer time frame moving average then the trend is up.
If the price moves below the moving average and the shorter time frame moving average is below the longer time frame moving average then there is a downtrend in the market. The slope of the moving average also helps to determine the strength of the ongoing trend.
Also Read: Sibbet Demand Index Divergence
FX pullback Reversals Indicator Explanation
The advancing phase, when price makes a higher high and higher low, is confirmed by upward sloping moving average . The declining phase, when price makes a lower high and lower low, is confirmed by downward sloping moving averages.
In Up trending market price take support near the moving average of the higher time frame and in the down-trending market price take resistance near the moving average of the higher time frame. traders should take entry near the support and resistance areas in the favor of the trend.
Moving average of 8 is used as short term moving average and average of 21 is used as longer period moving average. Both averages are applied on the 4h time frame chart and it can be used in any time frame lower than the four hours time frame.
Pullback Reversals: Buy conditions
- 8 period moving averages is above the 21 period moving average.
- Slope of both of the moving average is up.
- Price takes support on any of the moving average.
- Trades can use any candle patterns or trend lines to take entry.
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Pullback Reversals: Sell Conditions
- 8 period moving average is below the 21 period moving average.
- Slope of both of the moving average is down.
- Price takes resistance on any of the moving average.
- Trades can use any candle patterns or trend lines to take entry.
Pullback reversal indicator is super amazing…thanks so much Arun