Anticipation of a Reversal

What makes price turn around?

A change (a break) in the order flow.

Market profile is one tool that can point out possible areas of a stall / reaction that may ultimately result in a reversal.

Number of 30-minute blocks spent at a given price level. Price usually skids a bit further.

The order flow isn’t visible for forex traders in general, this is something to have to qualify for, and is called Level 2 – the typical use is Futures trading.

You can imagine the “at ladder screen” showing the number of contracts requested / offered at the given level.

Although most larger firms go out of their ways to hide the volume they are trying to accumulate without unintentionally triggering a reversal, there are others with different intentions: they are trying to spoof the market into a reversal by placing an outrageous sized pending order – that they usually pull at the last second – what can you lose, the broker would only give you a partial fill at the maximum size your account can afford, as a worst case scenario.

Your anticipation therefore should be an educated guess of the level where a likely change in behaviour / order flow can happen.

Another hint, that is actually accessible on top of the fore mentioned two, is the RSI2 reversal divergence.

The triangle sharp ends are the averages of the 4H divergences. What are the support and resistance levels, if not these?

The reason for a divergence is that the trajectory of an incline/decline was broken by an accumulation / distribution, and since there are now participants holding the bag – they are under water ever since they opened, they would likely want to get rid of their unwanted positions for a break even, plus those, whom are in gains, may just have their 1-pip beyond the opening price protective stop loss placed. These events may tip the fragile balance of the scale that has been fueling the progress in a direction.

If you can point out these levels before hand then you can prepare on time to make the necessary changes.