How To Trade Reversals - Step 1

Quick summary of step 1: find any type of divergence, ideally multi-timeframes. This is a 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 the step one in looking for potential reversals.