The Midweek Reversal and Trend Continuation

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In in this section, we’re going to look at the midweek reversal and also the trend
continuation. What this refers to is in our last lesson you learnt that after three levels of
rising or three levels or fall smart money will tend to do one of two things. They will
either reverse the prior trend after a stock hunt out of level 3, or they will continue the
previous trend. So the reversal of 3 levels of rising or fall we call the midweek reversal
and if they choose to keep the prior trend, we refer to this as a trend continuation, and
we’re going to take a look at an example of both of these processes.

The midweek reversal can happen on any day of the trading week and is a reversal of the
dominant weekly trend after three levels of rise or fall. Now for example, once smart
money has completed a weekly bull trend over the course of say two to three days; the
midweek reversal we changed the direction to a better trend. We’ve seen three levels of
rise, we go into level 3 accumulation, and then the market reverses, and we see three
levels of fall and that is simply a reversal of the prior trend. Now the reversal is not
guaranteed and is dependent on smart money’s fundamental outlook of the particular
currency. Like with retail traders obviously smart money is going to be analysed in
particular currency pairs at any one moment in time and they’re going to have their
opinion as to whether the pair is going to be bullish or bearish over the short term.

If we see three levels of rise and the fundamental outlook on the currency pair is bearish
then out of level 3 accumulation smart money are going to accumulate sell orders. We’re
going to see the manipulation of the retail orders to the upside inducing traders into the
wrong side in a market. Smart money will sell into this, and we will see the midweek
reversal as a bear trend unfolds.

On the flip side if we see three levels of fall and the fundamental outlook on the currency
pair is bullish, then during the level 3 accumulation smart money are going to
accumulate by orders induce sellers into the market buy into this pressure and then the
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midweek reversal will unfold in the form of a bull trend. So the fundamental outlook on a
currency pair will determine whether we’re going to see the midweek reversal or if we’re
going to see the continuation of the prior trend.

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Now the midweek reversal offers a swing trade opportunity if the start of the midweek
reversal can be identified and entered an intraday trade blast in two to three days can be
entered with a potential of 150 to 300 Pip gain. All this means is, if we can identify the
midweek reversal and we looked at an example of this in terms of catching Phase 1 of a
trend sell out of the level 3 accumulation, we’re going to identify manipulation to both
sides of the market and our intention is to catch the midweek reversal or the trend
continuation from phase 1.

If we identify that smart money going in to manipulate the market from a bull to a bear
market, our job will be to recognize this manipulation during level 3 accumulation and
catch the midweek reversal of the trend as it begins, and this will allow us to enter into an
intraday trade for any new cycle of two to three days. Now, if you think about we process
that takes place during the intraday cycle where we see accumulation, manipulation we
see three levels of rise or fall, and then we see the New York reversal. This is no different
to what is taking place in regards to the midweek reversal, but we’ve seen it during the
weekly cycle. The midweek reversal in a sense can be seen as the weekly cycles New York
reversal. They are different, but the process regarding the structure is the same during
the intraday cycle. We see three levels of rise or fall during the London session, and then
we see a reversal of the trend during the New York session. During the weekly cycle, we
see three levels of rise or fall over a course or two to three days, and then we’re going to
look for the midweek reversal which is a reversal of the prior trend.

We’re going to take a look at an example of the midweek reversal. Okay so in this first
example we’re looking at the Euro-Dollar on the 60-minute chart. During the weekly
cycle, we have three moves to the upside. On Tuesday we have our phase one on
Wednesday, we have our second phase, and then on Thursday we have our third and
final stage, and we now know that after three levels of rise or fall we’re going to be
expecting the market to go into accumulation.

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On Friday we can see that we have the sideways price action which is a characteristic of
accumulation. During this process, smart money will be analyzing the Euro-Dollar
currency pair and depending on the fundamental outlook of the currency they’re either
going to reverse the bull trend, and we’re going to go into a new bear or downtrend, or
they’re going to continue the uptrend. So if the fundamental outlook on the Euro-Dollar
is positive then during the accumulation period, they’re going to accumulate in buy
orders.

On the flip side, if the analysts at the institutions come back in, they have surmised that
the Euro-Dollar is looking bearish and the fundamental outlook is to the downside than
during the accumulation period. They’re going to be accumulating sell orders, so the

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midweek reversal is going to be a move opposite to the prior trend. So, in this case, we
have a clear uptrend.

So if the fundamental outlook on the currency pair is to the downside, we’re going to
expect to see our midweek reverse, when again the midweek reversal can occur, on any
day of the week. We have Tuesday Wednesday Thursday which are three levels of rising
Friday are the accumulation, and then on Monday and Tuesday, we can see the reversal
of the trend. Okay, so smart money regarding their fundamental outlook for the Euro-
Dollar would have been bearish. So during the accumulation period, they would have
accumulated sell orders. Now there is a clue regarding what their fundamental outlook
will be, and we get this regarding the stock runs.

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We know that during level 3 accumulation it’s impossible to tell what smart money are
accumulating but during the accumulation period we can see that most of the activity
occurs in the resistance area. We have multiple pins and breaks of the resistance. Now
we know that this will induce retail traders into the buy side of the market so just by
recognising that fact we can change our bias as to what the next move of the trend will
be. If we see that they’re inducing buy orders into the market, we can surmise that
there’s a high probability that the next trend of occurring is not going to be a
continuation of the prior but a midweek reversal to the downside and as these buyers
come in their orders are absorbed, and then we can see that we have 3 levels or drop to
the downside.

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Now as we know if we can catch phase 1 out of the accumulation zone we will be able to
trade an intraday position for a 3-day cycle. So the midweek reversal can occur on any
day of the week and will be seen after three levels of rising or fall. What determines if
we’re going to see the immediate reversal is the fundamental outlook on the currency
pair.

While putting numerous brokers and providers to the test, he understood that the
markets and offers can be very different, complex and often confusing. This lead him to
do exhaustive research and provide the best information for the average Joe trader.

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