A trend is no longer trending when the big guys decide so. Since the small guys can never know when this will happen, instead of asking a question that has no answer they should try to find a way to minimize their losses when it happens.
Agree 100% Three tell tail signs of a trend reversal: Analysts all super bullish (hint, trading desks need to unload shares) Stock promoters doing a great job (pump and dump tactics of big money). Stocks going down on good news (big money and quasi insiders cashing out into the public). Bonus point. Your friends and family who know nothing about it want in! On a 15 min chart it is when you get long down candle sticks on high volume that don't bounce or those lows get broken. Those are market makers making a market and getting burnt. Soon they will run too....
If the taxicab driver tells you he just bought stocks then a trend reversal is coming. This is because some street guys deliberately gave him the tip to pass it on...
This is what I don't understand about trends, as originally explained, but here's a chart showing my confusion. Price breaks the swing low in the trend. This is called a "change in behavior" when we say to ourselves "ok..maybe price is done going up and we should look for shorts". But if I took the short, you can see it would be a losing trade.
Actually the change in behavior occurred when price stopped trending upward and began moving sideways. Why look for shorts? Why not look for a continuation? Yes, price drops below your line, but so what? Trading isn't about lines; it's about making trades. Traders looked for trades below your line and didn't find much, so they looked back above the line. Here they found what they were looking for and price rose.
hey konviction, you could get a million different answers for this question... I suggest you learn to use the ADX indicator and you wll understand the trend, and the strength/weakness of the trend direction on any time frame. http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:average_directional_
Nothing works 100%. You could argue that the trend did indeed reverse to the downside, but then reversed again to the upside.
Not always, many times a pseudo lower low or high higher is made and a 2B is created, and the old trend resumes, trapping people who thought trend change using your definition. In my opinion you should add "tends" to your statement as you very well know, there are no absolutes in technical analysis. Cheers.
Well how is anyone supposed to trade profitably if we're just guessing with 50% accuracy about a trends direction? Why not just flip a coin then.