Hey hey, what's up my friend, so in today's training i want to share with you my top reversal price action patterns that work well. At least it works for me right among the hundreds of you know, chart patterns i've come across. I find that these three chart patterns right that you're about to discover are the most reliable ones that i've seen right. So, let's get started pattern number one sign of strength so bracket here or weakness is basically the opposite of the sign of string.

So what you're? Looking for when i talk about sign of strength is a higher lows into resistance, so let's say for example, this is resistance and you see higher lows approaching it right price tested it retraces re-test, it retraces re-test. It makes a pullback re-test it pull back, and the key thing that i want you to pay attention is the depth of the pullback. It gets shallower and shallower over here. This is the length of the pullback.

The first attempt right. This is the second time this is the third attempt, and this over here is the 4 for 10.. You notice that the depth of the pullback is getting smaller and smaller. This tells you that the buyers they're willing to buy at this higher prices make sense.

So this shows you right strength from the buyers because they're willing to buy at these higher prices, even though the price is approaching resistance. This tells you that they are confident right that this market could break up, and i want you to think of it like this right, so imagine that there is a wooden door in front of you and in your hands. Right now is one big, huge sledgehammer, a big mighty tall sledgehammer, and you take this hammer and you smash against the door multiple times. Let me ask you what is likely to happen to the wooden door? Well, it's likely to break right, makes sense and it's the same concept right as what i just shared with you earlier over here price you know, tested once twice twice four times within a short period of time.

It's like the hammer smashing against the door multiple times within a short period of time. Let me ask you what is likely to happen. The door is likely to break and it's the same for resistance right. Resistance is likely to break out higher all right, and the opposite of this is what i call a sign of weakness, which is simply lower highs into support, and for those of you who are familiar with chart patterns, this is also known as ascending triangle or descending Triangle, so let me share with you a few examples.

So, as you can see over here, this is the chart of bitcoin, and i want to point out to you over here notice here: there's a resistance notice, the ascending triangle: the series of higher low approaching resistance, higher low higher low higher low and then what happens. Well, it probably breaks out right same thing over here: lower highs into support. This is your area of support. You see lower high, lower high, lower high low high, what's likely to happen.

Imagine the hammer smashing against the door likely to break down okay and another example. Here, dollar against the indian rupee, so this one here i think the market is still unfolding, but from the looks of things right, you notice this market. This area of support lower high lower high lower high, what's likely to happen. My guess over here, based on this price section of this market, is likely to break down whether i'm proven wrong.

All right we'll have to to wait and see, but this is you know, uh the concept i'm trying to bring across and, of course right. This is no guarantee if you're thinking, oh man, rainer, you know your prediction is wrong. Your analysis is wrong. Well guess what my friend in trading we are dealing with probabilities.

Never certainty! In fact, i can show you a chart right now to prove that this doesn't work all the time. If you look at this bitcoin okay area of support lower high lower high lower high lower high break up. What happened rainer well we're dealing with probably this right. It doesn't work all the time, but uh more often than not right.

It tends to uh, have a follow through towards the downside whenever you see a lower highs into support. Okay, so that's my point here so moving on the second reversal, price action pattern, the triple test failure. So what i mean by this so imagine right you, you ask a girl out right, the first time you also hey jane. Would you like to go on a date with me and then jane says sir uh rainer, i'm i'm not i'm having some menses today, i'm not feeling too good right.

I can't go out with you, not anything. Okay, fine, all right, maybe it's a genuine reason. So the second time you asked jane, hey, jane, want to hang out and then jane, replied, hey rainer. I have a you know a sudden appointment today, rainer.

I can't hang out with you today, so you think maybe this might be a really genuine reason. First time his menses second time she has appointment with friends. It's all right. Let me ask her third time: hey jane, would you like to hang out with me for the third time and then jay tells you hey rayna.

You know i can't hang out with you. Alright, because today my cat, she has menses today at that point you know she's smoking, it right she's, full of beep right. So don't waste your time right. Three times, rejection move on right.

The grass is greener elsewhere, right, cut your losses and move on. It's the same here for trading when you see a price retesting, a level right and just couldn't break out. Chances are okay, it's not gon na break out and reverse. So let me explain how this one works.

So this one right is uh patterns. Like you know the head and shoulders pattern, the inverse head and shoulders pattern triple top triple bottom. So the key thing to hear to look at right is that, unlike the ascending triangle or unlike the sign of string where you saw series of higher lows approaching resistance for this one, it's just a swing up swing down three times so head and shoulders. For example, it swings up down up down up.

Then it breaks down there's one example or, alternatively, it could be a triple top like this test at once. Come back down test it. Second time come back down second time. Third time come back down so notice.

The price section of this compared to the ascending triangle this one here the lows right - are all pretty much uh near one another here of equal price point, whereas the ascending triangle, one, the low right, is making series of higher low. So this is a key difference. Right these new ones, you have to pay attention to it. Okay, so usually, this is what i call the triple test: failure it could be in the form of a triple top or the s all the head and shoulders pattern.

So let me share with you a few examples, so this one over here all right, so you can see over here. We have this head and shoulders pattern here or the triple test failure tested once twice and three times over here, otherwise known as the head and shoulders pattern. We have this neckline, then price breaks out or how about this one at aussie, swiss franc. You see this one here head and shoulders pattern with this one.

Here eight left shoulder hit right shoulder and over here we have somewhat another inverse hidden shoulder pattern over here, so you can see that the market, you know tesla, tried to break out three times but fail and then you know reverse back in the opposite direction. So this is what i mean by the uh triple test failure. It can come in the form of a head and shoulders pattern can come off in the form of a triple top right and the opposite is just the inverse and shoulders pattern and the triple bottom. So don't worry about you know.

How do i trade these chart patterns we'll talk about that later on, but for now i just want you to understand right. The concepts right behind this reversal patterns and the final one i want to share with you is a false break. So it's simply a strong price. Rejection at a key level could be at resistance.

It could be at a swing high. It could be at a you know the highest all-time high right, so you want it to be a strong rejection at a key level. So let me share with you what i mean by you know: strong rejection at a key level. So if you look at this chart very obvious over here dollar mexican, this is a strong rejection at this key level over here.

I believe this is like the all-time high here on dollar mexican. At this point in time, let me just do a quick pull zoom out the charts. You can see that yeah, i guess so right. Possibly this was the uh all-time high on dollar mexican, this candle here there we had a strong rejection over here right.

This is what i mean by a falls: break price broke out of the previous all-time high, only to smash down close lower for the day. That's what we're looking for a key level, a level that the whole world will be watching when the price breaks out of it and then reverse back in the opposite direction. Nice false break another one pound dollar! So this one over here. Let me just find this another one right.

Look at this pound dollar has been smashing right, uh consistently lower over time. I think this was possibly last year. Just do a quick zoom out yep 2019 over here price, making a series of lower highs and lower lows in the downtrend. This was the extreme low.

Then price came back re-test again only to get rejected and close higher for the day notice. This bullish price rejection, where the price closed higher for the day right, so this is another type of false break pattern. So, for those of you again who are familiar with chart patterns, this is something that we call. You know like a double bottom double top.

Okay, so so these are the three uh reversal price action patterns that i want you to be aware of, but at this point in time right, i'm not done yet because i want to share with you a few tips right to help you. You know better time. Your entries right and find high probability trading reversal price patterns to trade tip number one. Not all of these patterns are tradable, so yeah, i just shared with you three categories of reversal price action patterns, but i'm here to tell you that not all of them are tradable.

Why is that? And the reason is simple because you might not have a valid trading setup on every of this pattern. So let me just give you an example: if you look at aussie swiss frame okay earlier, we talked about this aussie swiss franc. So, let's say over here: you have this: this uh head and shoulders pattern. Okay, you saw this hidden shoulders pattern here right the triple test, failure test it once this is the left shoulder test it twice the head and test: it tries the right shoulder.

Then you have this neckline over here, okay, so now, let me ask you: yes, you have spot this reversal price action pattern towards the downside, that's what you're expecting, but how do you trade this? Where do you enter your trade? So what some traders might do is that they might short the breakdown of this lows or wait for the price to break and close below support. And you go short fair enough. But where is a logical place to set your stop loss because looking at this market right, the nearest market structure right could possibly be this swing high over here, where the price has been rejected before so. If you're going to reference this right shoulder to set your stop-loss all right, let's say you said it one atr above it, your stop-loss right, minimum right would be somewhere about here.

So from your entry point, let's say from here all the way up to here. This is a pretty done: white stop loss. Are you comfortable with the size of this stop loss? Because if you are then fair enough, take the trade right, but for most of you out there, probably not because this, i would say, is in the realm of like you know, two to 300 pips right. Most of you are probably not comfortable with it.

So this is why i said right that, yes, you might be able to spot a reversal price action pattern, but you might not trade it because you don't have a valid trading setup. So, on the other hand, let's look at new zealand dollar so for this one over here: okay, yes, now we have another triple test failure or an inverse head and shoulder pattern. I tested once the left shoulder tested twice from the head and tested tries the right shoulder. This is the neckline.

So now, can you see the difference with this pattern and the one i shared with you earlier for this one now, the move right into resistance is kind of like a forming a series of higher lows into resistance right, higher low higher low higher low. At this point right, we we even have what i call a build up right notice, this nice tight squeeze over here this nice tight squeeze over here. I like this for two reasons: number one i can have a tighter stop-loss. Instead of setting my stop-loss below the head or below the right shoulder here or here, i can now reference my stop-loss using the lows of this build up.

That's a good thing right. My stop-loss is now tighter. Second thing is this: is that the market is now in a low volatility environment. This tells me that the market is ready to make a move right, whether high or lower, you know is anyone's guess, but it's about to make a move.

So if i have a tighter stop loss and if volatility expands - let's say it breaks out it expands in my favor. I could achieve right a favorable risk to reward on this trade. I could risk, like you, know a 100 pips to make 200 pips 300 pips. That's something favorable right because of the size of my stop-loss, because it's pretty small like let's say 100 pips 150 pips around there right the market don't have to move too much in my favor for me to earn a profit of one hour.

A one-to-one risk reward ratio. Okay, so this is what i mean by not all patents are tradable. You still need a valid trading setup to trade it or how about? Let's go back to the previous example. Let's say you know, you are uh, you know you understand, price action trading, so what you can do is that, instead of chasing the markets right so chasing this okay, let me just zoom this one out.

Okay, this was the one we saw earlier, so maybe, instead of this one over here, instead of chasing the breakdown over here, you can look for the price to come down lower, make a re-test at previous support that could become resistance over here right. His previous support becomes resistance and looked for selling opportunities over here. So now you can set your stop-loss right to reference it against this area, where previous support could be resistance. That could be another approach right, but again you have to wait for that trading setup to unfold itself.

It may or may not occur, okay. So that's the first tip that i have for you. When you trade chart patterns reversal patterns right. Not all of them are tradable number two tip number two: how do you find high probability market reversals because here's the truth right? Not all of these patterns right - are created equal.

Some of them have a higher probability of reversal than the other one right, and the key thing is to watch right if your price pattern right leans against a higher time frame price structure. So let me explain so. Let's say you are looking for an ascending triangle pattern here: okay, all right. Let's say this is an ordinary one right and then you spot another one.

That looks exactly like this, but this time round, you notice that this ascending triangle right, the low of this ascending triangle - is actually leaning, uh against right, a higher timeframe support. So let's say this: gridline red line is a higher timeframe support and this ascending triangle is laying just above it so now can you see how difference how much of a difference this will make, because now your ascending triangle is on a higher time frame, support all Right, so let me share with you a few examples. All right to kind of you know make my point. So if you look at this chart over here, okay, so i'm going to share with you the chart of bitcoin that you're familiar with right.

So this was the ascending triangle you've seen earlier, if i zoom out some more. Furthermore, you'll notice that this actually is on a key level right, let me just show you: do you see where this ascending triangle, this one, that i shared earlier, where it's leaning against? It's leaving against this key area of support right tested once and if you look back this was actually a previous resistance did not becomes support, and now this ascending triangle is on this area of support as well. So i'm just going to show you here the big picture. You can see how significant this ascending triangle is right now, okay, so when i zoom in you realize that this ascending triangle right, it's leaning against this key area of support, which can be seen on the higher time frame, the weekly time frame.

So if you don't believe me, i just go up to the weekly time frame, so this is the ascending triangle this portion here - and this is the key area of support on the higher time frame, make sense okay. So let me share with you another example: pound yen, so same concept right if something, if a reversal price action pattern leans against a higher time frame, there's a higher probability of a reversal. So if we look at this right, this is a daily time frame. Right price is at this area of resistance.

If i go down to the four hour time frame, i'm going to split my charts like this catching all right. This is a four time frame change. This to pound yen over here, okay, so just to bring out the area this over here is at this portion over here. Okay, so if i just draw the level over here notice again, we have this triple test.

Failure over here is here right: price tested once twice three times and fail again. This is not just an ordinary uh triple test failure right. This triple test failure occurred at a key resistance on the higher time frame, and if the trade is right, what we can do is good. We can wait for the price to either.

You know re-test this previous support that could become resistance, go short on this rejection or you wait for this price, this market to break below this swing low. You can reference this swing high, to set your stop loss somewhere about here. So a couple of ways you could have traded this okay, but a key concept i want to share with you is that if you notice a reversal price action pattern, leaning against a higher time frame price structure like support or resistance, a trend line, it makes it Really much more powerful, okay, so that's tip number two for you and finally, right tip number three: the reversal price action patterns which i've just shared with you. They can also be traded as trend continuation patterns.

Okay, so let me share with you a few so, for example, let's look at this one here. So if you look at the bitcoin, if you look at this bitcoin right when the price collapse over here, okay notice over here, it was in a huge uh downtrend. When the price reversed from 20 000 right, so this point right, you can see that we have a bearish trend - continuation right shown as a descending triangle - lower high lower high lower high coming into support all right. So this is another, or rather this is to share with you right that reversal price action patterns right, don't just have to be trading reversal.

You can also use it to trade in the direction of the trade another one on goal right, if you look at this familiar market, is in an uptrend notice, a series of higher lows coming into resistance. This is another bullish trend. Continuation pattern in the form of a ascending triangle, so hopefully this tip right is to to let you know right that you in trading right. There's no like say this pattern is a reversal pattern.

You can't trade it as a trend. Continuation! No right! You have to be versatile right and understand that you know trend continuation patterns or rather reversal patterns. Right can also act as trend continuation patterns, make sense, and let's do a quick recap right. So here's what we have covered today right number one.

We talk about the sign of strength or weakness, ascending or descending triangle pattern triple test failure could be in the form of a head and shoulders pattern triple top triple bottom or the inverse head and shoulders pattern, then, with the false break, which are usually in the Form of a double top double bottom first tip is not all of these patterns are tradable, because sometimes you might not have a valid trading setup tip number two right: you want to lean against a higher time frame. Price structure like support resistance, trendline moving average so that you have a higher probability of a reversal and tip number three right reversal patterns can also be a form of a trend, continuation pattern and by the way, if you want to learn more of such price action Trading strategies and techniques right then, the best place to be is at trading with radio.com. My website here download this guide, the ultimate guide to price action trading or if you want to learn more about support resistance trend, line, uh aerial value and stuff like that. But if you want to learn more about candlestick patterns right, you know how to use it to better time.

Your entries and exist then go get the monster monster guide to candlestick patterns, all right. They are free right, just click on it right and i'll. Send it to your email address for free, so with that said, i wish you good luck and good trading. I will talk to you soon.

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