Sooner or later, any trend ends. Graphically, this is displayed as a stop of growth (or decline) followed by a reversal. How can you identify a trend reversal rather than a correction?
There are the following strategies for detecting trend reversals:
Moving averages. It is one of the best indicators for determining market movement. Yes, they will lag a little, but this is a cost in case the new trend is strong. The advantage of this method is that it gives the direction of the trend. This will allow you to hold the position for as long as possible and extract more profit with fewer risks. Alas, using this method, it is impossible to determine the trend reversal in the early stages.
Patterns. A double top pattern is an excellent option. If the price moves in the direction we need, we will be able to improve our position according to the classical technical analysis, and if the price moves in the opposite direction from our expectations, the losses will be minimal. However, with the "double top" you need to be extremely careful, as this tool requires quite a few skills.
Divergences. You can also determine a trend reversal using divergence. They have performed well in the cryptocurrency market, especially 4 years ago. The ability to enter or exit a position is extremely simple. The signal line leaving the histogram above zero tells us that it is time to sell the asset, and below zero it tells us to buy accordingly.
Oscillators. The Relative Strength Index (RSI) measures how overbought or oversold a given financial instrument is. It does not give, as such, signals that an asset should be sold or bought, but it suggests a trend reversal. When the RSI is outside the oversold level and declines, this indicates a trend reversal. The converse is also true.
Fibonacci levels. Many traders use them to identify trends. The levels consist of 6 instruments (fan, arcs, channel, timeframes, lines, and extensions) and allow you to very accurately determine a strong trend.
It is recommended to use these tools not separately, but preferably at least 3 at once. This will allow you to get the most accurate picture, as well as be as sure as possible whether there is a correction in the market or a new trend.
On the Cryptology exchange, you can find the best technical analysis tools, as well as sell or buy crypto assets at the best price.