How to Catch Market Reversals Before Everyone Else

Hey guys, Vladimir here from Home Trader Club, and in this video I want to talk about 3 key elements, principles in trading reversals. Ready? Let's begin. But before all the charts and the techniques, I want to— if you, especially if you are new to our channel, I want to invite you to our trading family, Home Trader Club, where by the way you can get your access for 2 weeks for free, limited access, where you would be able to explore all around and enjoy our free courses and free content we have for you. So follow the link below this video in the description, hometraderclub.com, and then when you are inside go here to the education and start to explore. Where to start? Of course, this is a great place to start with. Enjoy the free courses we have here and start exploring all the other content we have. If you have any questions, don't hesitate to reach out in the comments. So trading reversals is a big thing, and let's admit it, at some point of your trading career, your trading journey, You will be trading reversals. I mean, who doesn't like to sell when the price is too high, to buy when the price is too deep, and to go against the trend? We keep hearing all the time that when everybody is buying, you should consider to sell. When everybody panics, you Should be buying. I, I couldn't agree more. However, timing is crucial unless you do investment and you just buy a hodl, right, for a long term and you don't mind all the price fluctuations and you don't mind when the price loses 10, 20, 30% because you are in the game for the long term. Then it's a different story. But when you deal with trading, every price fluctuation matters. Every wave could affect your wins, your gains, or your loss. So understanding how price structures— understand the principle of the reversals is very important. And in this video, I want to break it down and to give you 3 great steps to follow when you spot your trading opportunities. But I want you to understand, um, what is the reversal concept. So let's take a look on this example. This is silver. It was skyrocketing like never before, right? Out of nowhere. From the levels of 25, then 30, all the way to above 115. It was unbelievable, historical, maybe once in a lifetime rally. But this is brutal, and eventually it reached to the point where it starts to drop. So of course you can say, of course, whatever goes up eventually drops down. Yes, absolutely. It's this is how life is. Everything moves in cycle, but the question is where? Because many traders go with just a simple overbought oversold conditions without all the rest. The problem, for example, RSI above seventy or eighty. However, yes, but that's only indicator. Indicator indicates. The price dictates. It's always like that. It always was. And I myself love indicators, but as helpful tool. You cannot make your conclusions only based on indicator. I used to do it a decade ago. Not always it ended up good. So trust me when I say, uh, you cannot just rely on indicators, uh, and there is no such thing holy grail. It must come with the price. And for example, traders go with RSI oversold, overbought and oversold. Here on all this rally, starting from this point here, RSI is overbought and it goes from 43 up to 54. And I promise you that most traders would never be able to survive that. They will hit the margin call, they will reach a margin call, they will blow up their trading account. So when you just try to follow indicator or just support resistance or just engulfing, like beautiful engulfing, beautiful engulfing, beautiful engulfing, it will not always give you the results you would want. So to optimize that, you would want to see specific price structures. So that's what I want to break down today. I will be presenting also one trade example, uh, trade we executed in Home Trader Club. But I want to, before that, before we go to the trade itself, to give you some principles which you would want to follow. Principle 1, find— if you rely on 1 and 2 could be twisted, the principle, okay? So first principle is to find the divergence. Indication that something is building up. It's not a guarantee, it's not for sure, but that's a great indication something is happening. In, uh, indication could be RSI on overbought, for example. Um, indication could be also a situation like— let me show it to you— like here on the 4-hour chart at the peak when the divergence starts to build up. Moving average, um, let me just show it to you here. Moving average starts to drop, histogram starts to drop, higher highs on the chart, lower highs there, RSI starts to drop. That's all a principle of divergence. And I mentioned it before, if you want to learn much more about all the terms, join our family, the Home Trader Club. Enjoy all of our courses we have here and are super comprehensive, uh, with all the information you need. Media Zone, everything is here for you. So this is the first step: find divergence. Ideally, and this is where the trick comes, multi-timeframe divergence. Okay, so it could be one of the following: RSI overbought divergence. Okay, I call that an extreme divergence, but It doesn't— it's not an official name or anything like that. It's just extreme levels. This is first sign. It doesn't guarantee anything, just the first sign. Okay, so for example, weekly chart started to be overbought here, then slowly dropped, and then another drop, another peak, all this area. So the weekly was overbought for a while when we are looking for— we are waiting for other signs. Daily enters this zone exactly. Daily entered this place, but the reversal was not given perfectly here. Then it enters this space where it's above RSI is above 80. So now you have weekly and daily overbought conditions. So the next step is the lower time frame. Find the divergence which is contradiction between the chart and the price. For example, this was an uptrend, right? So when the market is making higher highs but indicator starts to make lower highs, boom, that's a bearish divergence. So of course it is mirrored when you work with buy after a bearish trend. So this is key principle: when you have the multi-timeframe all aligned, that's where you would want to follow for the next step. And the next step is the price flips from sequence of higher highs, higher lows. You want to finally get lower lows. Okay, so before we go to step 2, quick summary of step 1: find any type of divergence, ideally multi-time frames. This is very important step when you are looking to trade reversals. For example, as we saw here, weekly overbought, RSI above 80. It could be any other indicators, this is just for example. It could be CCI, momentum, Elder Force, you name it. Go to the lower time frame, in that case in this example daily, look for that also having any type of divergence. In that case, overbought as well. And then on the third following time frame, look for the slowdown, the reversal divergence when the market is making higher highs, indicator starts to make lower highs. I love to use MACD and RSI. It happens here, histogram and the RSI, higher highs on the chart, lower highs on the RSI. That's step one in looking for potential reversals. Let's talk about the second step. As I started to mention before, when the price flips, and that happens from higher highs, higher highs, higher lows to lower lows, that's still not a guarantee the trend is going to change, but that's already an alarm that sellers are showing their interest and very likely after retraces sellers will try to take control, especially as long as this peak holds. So if we examine the 4-hour chart with the divergence and then we go to the 1-hour chart to trying to find the trigger, because remember, when you have all your time frames aligned— 4-hour, weekly, daily, 4-hour— all show the divergence, you can go to the lower time frame and look for the price structure flips. And that's where I want to take this example. Let's go to our trades. Uh, silver, silver, silver, silver, silver. Here. So this was our trading plan on the silver. Break below this low triggers our sell. Invalidation would be above the high before the last high before the trigger happened. And as per the target levels, we would be aiming— this is the divergence, the last highs, the low in between is going to be the first target, and then the range is going to be the next target. So if we take a look on the daily chart, on the 1-hour chart, okay, this was our trade that we were talking about. And look what happens here, it starts to, to create the conditions High, low, high, low, high. Boom! Flips. And what kind of flips we are looking at here? Lower lows on the chart, but take a look at this perfection. Higher highs on the chart, lower highs on the MACD, bearish divergence. Lower highs on the RSI, bearish divergence. And then the last low breaks down here. This low and this low are broken together. Lower lows on the chart and lower lows on the MACD. This is our sign that something is building up, and as long as this peak holds, any pullback should provide further sell opportunity. That's not a guarantee, but in at least 70% of time, if executed correctly, this would give you amazing trading opportunities, usually with phenomenal risk-reward. And by phenomenal, I don't mean 1:40 always. 1:2, 1:3, 1:5, even 1:1.5, as long as you maintain Positive risk-reward ratio, money management and risk management. You have your odds, and that's what you want as traders. So to summarize, step 2: what we want is the price to flip. Okay, what do I mean by that? When from sequence of higher highs, higher lows, look for Lower lows. This is what you want to see. And then compare— look at that once again. Low, high, low, high, low, high. And this is the high, fake peak, and then boom, lower lows on the chart and lower lows on the MACD histogram for perfect synchronization. That's step number 2. When you are looking for high probability and high reliability reversal trading setups. Step number 3, entrance— entry to the trade and management. So the most simple method for those who don't have the time to babysit the trades, as soon as that happened above with invalidation above the last peak You just shoot your trade. So sell. Where do you aim for target? You go to the higher time frame. This was the divergence, which means we expect at least the low of the divergence. At least. Okay, so this would be your target. Let's put some level here, and then when you go to the one-hour chart. When you hit your sell, this at least going to be your target. What you have to make sure is upon your entry and the protection, let's call that X risk, the target has to be bigger than the loss, potential loss. This is how you guarantee that even with 50% accuracy, you will be making profits. You will be gaining from trading. Okay, so in our case, if we attack with the breakout and with the invalidation above the peak, it's about 760 points to the target. It's more than 1,000 points, which means Bigger than 1:1 risk-reward, fantastic ratio. This is for the first target. For the second target, look for important resistances that were broken and become support, and lows as the support levels and the demand. In our case, we have a big range here that could be another beautiful target. So if we go back to this trade I explained before, This is exactly how we executed our trade here, okay? And that's what you will want to go with. Now, of course, when it drops like, like crazy, we can say, but you could earn more. You can earn unlimited, unlimited when you look backwards in backtest. And looking backwards, you are the champion. You can be a billionaire in real time. You have to work with real decisions, real levels, uh, real, um, triggers and management. So for me personally, it's all about the risk-reward ratio. I'm not greedy. I'm looking for realistic levels based on these techniques. And once happens, I love to go with the trades, not looking backwards, but I could earn more. If you love trailing stop loss and let the market kick you out whenever the market ready, perfect, do it. I love to set up my levels and I love to watch out the price behavior around the levels. That's it. That's how I trade and that's how I find it, uh, working ideally for myself. So principle number 3, after you found all the confirmation for 1 and 2 Make sure the numbers work for you, which means once you find the conditions of higher fake highs that turn to be lower lows and you look to enter the trade, make sure that from your entry to the, the risk you take from entry to stop loss, uh, is smaller than the take profit or the reward ratio. which is the distance between the entry to the take profit. In our case, in our example here, that once again I want to show you, the one that we executed here in Home Trader Club. So in that case, what we want to follow is if this is our entry sell and this is our stop loss, our target should be bigger. So if the stop loss is about 760 points And the target is more than 1,000 points. Numbers are positive, work for us. That's a legit trade. And for those who have the time to look for possible retraces— and here I want to, to say very clearly, not always the retraces will happen. Sometimes the market crush one way and you might miss when it happens. That's why I personally love to attack the breakout if the risk-reward is already good when happens. If not, then of course retraces make sense. But if the risk is good by the breakout, I'm in. So what do you want to follow for alternative when you have this structure of fake highs, price flips and make lower lows and then retraces, this high acts as a supply. When the price comes nearby and starts to reject from candles that make higher highs, higher lows, to candles that make lower highs, lower lows, that's your trigger that something happens. In our case, low, high, low, high, lower low, boom! This zone comes for the retest, and look What happens next? Look at these bars breaking the structure of rising candles to declining candles, to lower highs, lower lows. And that's once happens the trigger. Of course, when you have the time to, uh, you know, watch out for that, you could improve the risk-reward ratio because now your risk is going to be smaller now. You now protect the peak, right? And the reward, of course, could be bigger. So that's how you could improve risk-reward ratio. But that's not always the case. Again, sometimes, as I said, sometimes the market just crashes. So for me, it's all about the numbers. If the risk-reward works for me, I'm there. If not, then I'm looking for retraces. But if the risk-reward is there, I am there. So these are the 3 key principles of finding reversals. Don't do the mistake that majority of beginner traders do, and that's rush in a trade just because it rallied too much just because they found engulfing, they found pinbar, they found, uh, uh, overbought conditions. It's all good, but it's not enough. Combine that with the price based on these 3 principles I showed you here to increase your probability. It will not guarantee your win. It will increase your odds to be right. And in trading, which is a statistical business. This what matters. Thank you for watching. As always, I hope you find value in this educational video. If you have questions, don't hesitate to ask, uh, in the comments. I wish you wonderful trading. All the best to you and yours. Thank you for your time watching the video, and I want to invite you once again to our family, Home Trader Club, and enjoy all the amazing content and real-time education and trading opportunities we have for you. Follow the link below this video in the description. Best to you and yours. I'll see you soon with more. Good trading and bye for now.