How to Know that a Pullback is Actually a Reversal?
Trend Reversals: How To Spot and How To Trade. Let's look at some tiny price action clues that a pullback could actually be a reversal. This one is mostly for day traders. This is a good question that I get asked quite a lot. You have a scenario where the market is pushing up and pushing back... should I buy or sell? You need as many clues as possible to give you an idea of what's going to happen. Of course if this worked every time we would all be millionaires. But this is about building an edge and hopefully building a strategy that has positive expectancy and is possible and which we can continue using for a long time. The first thing to consider is the distance of the pullback and angle of the pullback. A shallow pullback is far better from a bullish perspective... This is all about supply / demand imbalance. The other scenario is to look at the length of the candles to the downside compared to the green ones.