📖Trend Reversal [R] Signals
Learn about our game-changing trend reversals, including auto-confirmation
Overview
E5 Trading’s Trend Reversal Signals and Candles are game-changing, and you’ll never want to trade without them.
Designed to capture reversal price action, local tops and bottoms, and scam price action, our reversal signals are one of the most powerful and easy-to-use features available on the market.
Learn the simple process described below to confirm reversal price action, and you will be trading with a market edge!
[A] Trend Reversal [R] Signals are toggled [On] by default.
Use the drop-down box to select Potential Reversals or Confirmed Reversals.
Potential Reversals flag when market conditions suggest a trend reversal may be coming.
Potential Reversals may become Confirmed Reversals if the price action in the following one or two candles confirms the direction of the reversal signal.
Use the color selector boxes to change bull [default: green] and bear [default: red] reversal signal [R] colors that appear below and above the potential reversal candles, respectively.
When a reversal has been confirmed, the Confirmed Reversal candle will assume the same bull | bear coloring as the potential reversal signals.
Trend Reversal Confirmation Overview
Trend Reversal Signals [R] identify the POTENTIAL end of a local trend and the beginning of a new one. Think of Potential Reversals as a warning signal to catch your attention.
All reversal signals are deemed POTENTIAL reversals until the price action of the next one or two candles after the reversal signal confirms the reversal.
Reversal signals may be CONFIRMED MANUALLY by a simple method described below or CONFIRMED AUTOMATICALLY using the Trend Reversal Signals drop-down menu.
Manual Confirmation Method
To manually confirm a potential bullish reversal, the close of the 1st or 2nd candle following the reversal candle must be greater than the high [wick] of the reversal candle.
To manually confirm a potential bearish reversal, the close of the 1st or 2nd candle following the reversal candle must be less than the low [wick] of the reversal candle.
Why must we sometimes wait for 2nd candle confirmation?
Sometimes there is market indecision [i.e., sideways price action] after a potential reversal signal, requiring a 2nd candle to confirm the reversal.
Market indecision can extend beyond two candles, so be on the lookout for it. In these cases, the original potential reversal signal may still prove profitable.
Example: Trend Reversal Signals and Candles
The below example is from the BTC/USD chart on the 15-minute timeframe.
In this example, notice how any potential reversal [R] signal not confirmed by the first or second candle is faded out; these reversal signals should not be traded.
Wait until the first or second candle after the potential reversal candle confirms the signal.
Automated Confirmation
Wait until the first or second candle after the potential reversal provides confirmation for the trade.
[B] To use automated confirmation capabilities, select "Confirmed Reversals" from the drop-down menu.
Selecting Confirmed Reversals will result in any potential reversal signal [R] updating to a faded/ghosted reversal signal [R] if not confirmed by the next one OR two candles.
The first "R" on the left side of the chart above shows an example of faded/ghosted reversal signal.
A second way to distinguish between potential and confirmed reversals is by looking at the candle body. Confirmed reversal candle bodies will be either green [bullish reversal] or red [bearish reversal]. In contrast, potential reversal candle bodies that ultimately did not confirm based on the price action of the following one or two candles will maintain the default candle body coloring.
Some traders may prefer a visual cue directly under or over the confirmation candle to identify when a reversal has been confirmed.
[C] Toggle [Show Auto-Confirmation Labels] to display a green [default] Confirmed Reversal [CR] label under the candle for a bullish Confirmed Reversal or a red [default] Confirmed Reversal [CR] label over the candle for a bearish Confirmed Reversal.
Auto-confirmation is limited to the first two candles after the potential reversal signal [R] flags on the chart. Manual confirmation is required for the third candle [and beyond] after the potential reversal candle.
Example: Confirmed Reversals with Auto-Confirmation Labels
Reversals Sensitivity
[D] To adjust the number of reversal opportunities displayed on the screen, select one of three [3] Reversals Sensitivity levels.
The available drop-down options are Less Signals, Default, and More Signals.
The Default setting provides the trader with a substantial number of reversal trading opportunities on all timeframes.
Less Signals decrease the number of Potential Reversals compared to Default, and More Signals increase the number of Potential Reversals compared to Default.
This feature allows traders to adjust the number of reversal signals per personal preference while still helping to eliminate all non-actionable reversal signals using the auto-confirmation capability.
Select the Reversals Sensitivity setting that produces the most reliable signals under recent market conditions for the specific asset and timeframe being traded.
Trend Reversal Alerts
All real-time trade signals flowing into Discord for Potential and Confirmed Reversals are based on the Default setting.
To set alerts for Less Signals or More Signals, refer to the Setup Alerts section for guidance.
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