The 3-Strike Rule for Spotting Trend Reversals.
When trying to spot a trend reversal in crypto markets, the 3-Strike Rule can help you identify the perfect moment to enter or exit a trade:
Strike 1: Price Reaches a Key Support/Resistance Level
Watch for when the price touches a major support or resistance level (a previous high or low, moving average, or Fibonacci retracement).
This is the first sign that the market might be changing direction.
Strike 2: Momentum Weakens
Look for weakening momentum indicators like RSI (Relative Strength Index) showing overbought/oversold conditions or divergence with price.
This signals that the current trend is running out of steam.
Strike 3: Price Action Confirms
Finally, wait for a clear price action signal, such as a candlestick pattern (e.g., engulfing, pin bar, or Doji), confirming the reversal. Volume should support the move, confirming market participation.
Once you see all 3 signs, you can confidently trade the reversal. This trick helps avoid false breakouts and gives you a higher chance of catching a true trend change!
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