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Trade Strategies: Accessing a trade to play a 2-Day Reversal

DAX 11 April 2018

A 2-day reversal occurs when a strong trend is followed by a consolidation day which fails to show continuation and often exhibits a rejection tail when looking at a profile chart. The day after the consolidation is when contrarian trades can be considered, however certain criteria are still required: another rejection tail and ideally an open outside of value that fails to get back inside value. If a market shows strong characteristics (open with a gap or outside of value in direction of trend) after a potential 2-day reversal set up, then it is more likely that continuation will follow the consolidation.

Whilst a 2-day reversal is reasonably simple to identify, the difficultly comes in finding a way to trade it – no two are the same, so a rigid strategy that might be applied to, say, a Head and Shoulders pattern will not be viable. Instead, accessing the trade using trade strategies you currently have, allows you to take the trade on with much more clarity regarding risk/reward whilst still playing a big picture set up.

Accessing a 2-day reversal is the focus in this AXIA daily debrief, firstly looking at clues to show the trade is on and then where a variety of different entry types can be used to access a trade that all have the same goal.

Technical analysis forms the basis of numerous AXIA trade strategies and is taught in the early part of the Axia Futures 8-week Intensive Trader ​Training.

If you are looking to develop a career as a trader within a professional and successful environment, then the Axia Futures 8-week Intensive Trader ​Training is the most comprehensive in the industry based​ ​upon​ ​skill​ ​development​ ​within​ ​the​ ​proprietary​ ​futures​ ​trading​ ​environment.

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