It’s common knowledge that most so-called reversal traders are attempting to forecast market reversals far in advance. Entering after the peak or bottom has formed, successful reversal traders take their positions. To benefit from reversals, you must be willing to sit on the sidelines and wait for the right opportunity to come along.
A reversal strategy tries to profit from the reversal of market trends. Investors hoping to profit from the reversal of Amazon’s bull trend should look for signs that the surge may end.
Before the market settles into a narrow range towards the end of an uptrend, you often witness a loss of steam, volume, and lower highs. Frequently, we see the genuine “reversal” many traders search for when this range breaks to the downside.
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