Effective Strategies for Market Reversals

Oct 13, 2024

Lesson 5: Market Reversals - ICT Amplified Day Trading and Scalping

Introduction

  • Focus: Trading market reversals.
  • Objective: Cover 8 effective reversals for trading with consistency.

Types of Market Reversals

1. Trading Previous Days' Highs and Lows

  • Concept: Market reverses after raiding buy/sell stops at previous highs/lows.
  • Criteria: Look for liquidity resting above or below previous highs/lows.
  • Strategy:
    • Previous Day High: Sell if market reverses after reaching above the high.
    • Previous Day Low: Buy if market reverses after reaching below the low.

2. Intra-week Highs and Lows

  • Intra-week High: Market trades above current week’s high, raids buy stops, and then reverses.
  • Intra-week Low: Market trades below the week’s low, raids sell stops, and reverses.
  • Strategy:
    • Look for trades above or below intra-week highs/lows in conjunction with higher time frame arrays.

3. Intermediate Term Highs and Lows

  • Concept: Trading on old highs/lows from previous weeks or months.
  • Strategy:
    • Look for the context of the market and the reason for trading above/below these levels.
    • Consider it as potential reversal points, but with caution of continued trends.

4. New York Session Reversals

  • Characteristics:
    • Usually, New York follows London’s trend, but reversals can occur.
    • If price reaches higher time frame PD arrays at New York open, anticipate reversal.

5. London Close Reversals

  • Characteristics:
    • Potential for intraday scalps or a longer-term reversal.
    • Use when daily range has been exceeded.

Detailed Insights

Trading Expansion Swings

  • In Opposing Swings:
    • Retracements offer trading opportunities after rating stops but are dependent on context and additional confirmations.

Institutional Order Flow

  • Importance: Understanding higher time frame institutional order flow assists in identifying reversal points.

Practical Application

  • Example: Look for confluences such as fair value gaps or order blocks aligning with reversal setups.

Additional Considerations

  • General Tips:
    • Regularly examine charts, focusing on previous days/highs/lows for reversal characteristics.
    • Align reversal strategies with higher timeframe analysis.
  • Experience: Practice and experience are crucial to effectively implement these strategies.

Conclusion

  • Study and Practice: Continual chart analysis is necessary to understand reversal patterns fully.
  • Future Learning: Upcoming lessons will further detail these concepts and aid in understanding market structure for reversals.

Key Takeaway

  • Reversal Trading: Requires blending of concepts, contextual analysis, and alignment with institutional behaviors for effective day trading and scalping.