Reversal Point – Doji, Topping Tail & Bottoming Tail

Everyone in trading wants to know two things: when to buy & when to sell. There is no holy grail to this question.

So you might ask, “Is there nothing we can do?”

No, there is! By knowing the potential reversal point, we will have an edge over the others.

klse stock trading tips

klse stock trading tips

When there’s a high volume Doji bar, topping tail or bottoming tail, there’s a high chances of reversal. Why?

Doji

When there’s a doji bar, it means that the market is uncertain about the direction. It could go either way. Therefore when there’s a high volume Doji Bar, exit the market if you have position. Else wait to the next bar for confirmation before entry.

Topping Tail

This appears after a few up bars. The traders try to push the price higher but the market is not interested. Therefore you’ll see the price being pushed high but close much lower than the highest price. The volume indicates that the market makers are stopping the up move and distributing their previous “long” position. Prepare to switch position if there is a follow through next bar (drop bar). Put your Stop Loss @ the close of the topping tail.

Bottoming Tail

This appears after a few down bars. The traders try to push the price lower but the market is not interested. Therefore you’ll see the price being pushed down but close much higher than the lowest price.. The volume indicates that the market makers are stopping the down move and distributing their previous “short” position. Prepare to switch position if there is a follow through next bar (up bar). Put your Stop Loss @ the close of the bottoming tail.

You Should Also Check Out This Post:

More Active Posts: