How does a trend start?
Upward trend: The trend changes from downward to upward.
→ Prices must take out the nearest 'Peak' and the Trend was previously Downward.
→ A breakout above the previous peak signals a bullish reversal.
Dropping Valley Reversal
→ The market forms a dropping valley, followed by a breakout above the previous peak.
Equal Valley Reversal
→ The market forms an equal valley, followed by a breakout above the previous peak.
Rising Valley Reversal
→ The market forms a rising valley, followed by a breakout above the previous peak.
Downward trend: The trend changes from upward to downward.
→ Prices must take out the nearest ‘Valley' and the Trend was previously Upward.
→ A breakdown below the previous valley signals a bearish reversal.
Rising Peak Reversal
→ The market forms a rising peak, followed by a breakdown below the previous valley.
Equal Peak Reversal
→ The market forms an equal peak, followed by a breakdown below the previous valley.
Dropping Peak Reversal
→ The market forms a dropping peak, followed by a breakdown below the previous valley.