When anticipating a price trend reversal, a trader is expecting markets that are falling to reverse and head higher and vice versa. There are a number of early identification tools that can be used in developing a sense for when price trend reversals are most likely to occur. There are also a number of supporting forms of evidence that help a trader develop a confidence and price projections when a reversal of price trend is suspected. Some of the technical studies to the right discuss aspects of trend reversal and momentum changes. Below is a chart of the Nifty Future. The dots on the chart were provided to members on average 3 days in advance of the date. These dots indicate critical days which are points in the market path when a reversal of the short segment of price trend has a higher probability of occurring.
When the flow of candle bodies rises leading into the critical day, the expectation is a reversal of that trend and for the flow of candle bodies to fall coming away from a critical day. When the flow of candle bodies falls leading into a critical day, the expectation is a reversal of that short trend and for the flow of candle bodies to rise coming away from the critical day. There are some special circumstance signals such as the June signal on the graph above which became a short consolidation period before there was a continuation of the price trend higher. This type of signal cautions a trader to allow price trend to confirm the expectation before risking capital on the trade. The April 18 signal is a special circumstance in that the trend leading into the critical day was still down despite a strong rise in prices on July.