Identifying the change in the trend
I guess, each more or less experienced trader has come across such phrases as "Trend is your friend", etc. This is one of the oldest traders' sayings and can be thought of as wise. Trend, in essence, is a strong one-direction movement, and many traders consider that there is a chance to receive profit in trading by the trend.
However, to make a profit by the trend, you do not only need to know correct entry points but also guess about the points where the trend can end. Knowing the point where the trend possible ends, you can make a maximum profit on every open trade and detect trend reversal points from which you can enter a new trend.
Signs of trend reversal
So, the first sign of the trend coming to an end, will be a breakaway of the trendline. When the price breaks through the current trendline, do not make preliminary conclusions and reverse your position. To make sure that your trend is over, wait for the second breakaway. Two breakaways of the trendline is a serious reason for the end of the trend.
Hence, when we see that the wind changes, this is a signal for a trend reversal.
To find the point, you need to break the trend down into waves or detect momentum and correctional price movements. When the price breaks through the beginning of the last momentum, this might mean the end of the trend.
Just based on these two principles, one can invent a good and profitable strategy.
By Dmitriy Gurkovskiy, Chief Analyst at RoboForex