Overview of 5 Bar Reversal Indicator

Most traders strive to capture reversal trends accurately. It isn't easy. It can be very beneficial to spot reversals and execute trades at the right moment. However, it can also prove risky if it is not done correctly. The 5 bar reversal indicator is a technical indicator that can be used to pinpoint impending trend reversals. What is the 5 bar reverse pattern? This is a very useful technical indicator.

An overview of the 5 bar reverse indicator

The 5 bar reverse indicator is a short-term price pattern that generates an trading signal. It can also help you to time your trades correctly. The 5 bar reversal indicator has 5 consecutive bars, or candlesticks. This indicator is essentially a technical indicator that indicates that the trend will reverse after 5 consecutive bearish or bullish candles. Many traders use the pattern to indicate impending reversals.

How do you use the 5 Bar Reversal Pattern?

This indicator is accurate but not reliable. Sometimes, even if a chart shows 5 consecutive bearish or bullish candles, the trend may continue rather than registering a reversal. It is important to understand when you should enter a trade once you have spotted the 5 bar indicator of reversal.

These are the key points to remember before you enter into trades based on the 5 Bar Reversal Signal indicator.

• First, watch out for five or more bullish or bearish candles consecutively.
• Once you have spotted the pattern, it is advisable that you only enter into trades if the 6th candle moves in an opposite direction to the 5th candle. If the candle is a bullish 5 bar candle, it's a good idea to only enter into a trade if the 6th candle becomes a bearish candle that surpasses the 5th candle.
• This indicator is better than any other indicator.

Conclusion

It is a good idea, as with all technical indicators to confirm the trend reversal before you enter into any trades. You should also consider exiting your positions before the 5 bar signal indicator reverses. This is because it involves a counter-trend trading strategy.