Technical Analysis—Trend Reversal Indicator

Figure 1.  One week % change or ROC(1) (Source: stockcharts.com)

One-Week Strong Rally

Mac10 (@SuburbanDrone) used 1 week % change (i.e., ROC(1) in Figure 1) to show that the potential market retreat after one-week strong rallies (i.e., green vertical lines in Figure 1) during this year's bear market rallies.  As observed, the 1st market retreated after a strong one-week really in 3 weeks; 2nd one in 2 weeks; potentially 3rd one may take 1 week to retreat.  So, the movements of market during next week will be important, which we can use a trend reversal indictor to monitor.

Trend reversal indicator

Roy Mattox (@RoyLMattox) also shared one good trend reversal indicator which he had followed over three decades—that is when net new highs exceed the new lows.  The below chart was shared by him.

The most important trend following charts to follow. It is a hard penny environment until you see a cascade of blue.

Figure 2.  $NAHGH-$NALOW (source: stockcharts.com)