Spotting reversals in forex as Trump demands lower rates at Davos [Video]
|In the fast-paced world of forex trading, catching trend reversals or pauses is a game-changer. To stay ahead, focus on two critical pillars:
1. Change of technical price structure
Watch for higher tops and bottoms forming on your charts—this signals a potential break in the trend. Patterns like the reverse head-and-shoulders are especially telling, showing that sellers have lost their grip while buyers regain control. These changes, often seen on four-hour or daily charts, could mean a deeper correction or even a complete reversal.
2. Changes to key trend drivers or fundamental policy
Beyond the charts, the narrative matters. Take Donald Trump’s bold demand for lower interest rates—this stark departure from his previous "higher for longer" stance is shaking up the market. Such a fundamental shift in rhetoric can spur profit-taking on the strong US dollar, creating opportunities for reversals in major currency pairs like NZD/USD, AUD/USD, and EUR/USD.
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