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The Reversed Direction

On days When economic news with high or medium importance is released, if the price breaks the support line S2, which supports the main direction (in the days it is increasing), then the direction will reverse and there is high probability that the price will continue to move in the reversed direction. In such case, usually the price rapidly moves towards S3 and provides a chance to obtain profit from the reversed direction.


Example:

 


Consider that the intraday forecasts of "Forecast City", with its precise calculations performed by the super advanced software 4CastMachine, are produced in a way that if the main direction trades close in the stop loss point, the profit resulted from the reversed trades can almost indemnify the loss.

Example: As you can see in the front image too, by breaking R2 the price has reached to R3 and the loss of main trades has been covered by the profit of reversed trades:

 

On days when the reversed direction is consistent with weekly forecast direction, also DTO does not notify any opposite direction, the break of main direction is expected. Therefore, if it happens, you can enter in the reversed direction. This technique particularly is very useful in the days that the price is in or close to "entrance area" of our weekly forecasts and produces better entering for your trades which are in the "Trend Hunter Strategy".


Example:

Correct entering:

Considering that the weekly forecast is decreasing and the price is also near the "entrance area" of the weekly forecast, we use S2 breaking for our entering on the Trend Hunter Strategy. According to one of the methods for "closing trades", as long as we do not get any intraday forecast against weekly forecast, we can keep our trades open. Based on this method, the front reversed trades can be closed on 01/08/2013 on the time of getting intraday forecast with rising main direction; therefore, we would take a profit around 400 pips (100 * 4).

Unlicensed entering:

Considering that the weekly forecast is decreasing, we are not allowed to enter to the market with a "BUY trade". But suppose that we are extremists and enter into such a risky trade, such trades have closed with a loss of 50 pips (200= 4 * 50) on averag. Fortunately, the reversed trades could produce on average a profit of 50 pips (200= 4 * 50) and clear the loss of past trades from our trading report.