More on Identifying Retracements.

Let’s do more on identifying retracements.

Here are two more methods.

Method #2: Pivot Points

Another way to see if the price is staging a reversal is to use pivot points.

In an UPTREND, traders will look at the lower support points (S1, S2, S3) and wait for it to break.

In a DOWNTREND, forex traders will look at the higher resistance points (R1, R2, R3) and wait for it to break.

If broken, a reversal could be in the making! For more information or another refresher, check out the Pivot Points lesson!

Method #3: Trend Lines

The last method is to use trend lines. When a major trend line is broken, a reversal may be in effect.

By using this technical tool in conjunction with candlestick chart patterns discussed earlier, a forex trader may be able to get a high probability of a reversal.

While these methods can identify reversals, they aren’t the only way.

Nothing can substitute for practice and experience.

With enough screen time, you can find a method that suits your forex trading personality in identifying retracements and reversals.

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