RT Concepts (Reversal Triggers) Explained

The most powerful setup in my tool kit.

My signature Diagonal Entry Model is a technical reversal model that gives an informed entry into the earliest stages of a mean reversal, before price sets up an actual break out consolidation. The model is particularly successful during volatility events and range bound price action, because it allows entries at support or resistance, allowing us to participate in bounce stages, well before a reversal confirms or rejects. Through continuous execution of the Diagonal Entry Model (DEM) over time, it became clear to me that there are specific points before an entry diagonal forms, where we can isolate an earlier Reversal Trigger. You will have seen the RT on the charts of my daily trade reviews, and these entries turn out to be even more consistent and effective than the actual entry diagonal, primarily because the earliest entry offers the best risk/reward by far.

“All you need is one pattern to make a living.” – Linda Raschke

What is a reversal?

I’ll stick with bullish price action for the instruction.

A new trend always starts with a single higher high and a higher low. If price then makes another higher high, a trend confirms. This trend succeeds as long as the higher low doesn’t fail. Price needs to continue to make higher highs and higher lows.

Before price can make a higher high, we first need a lower high to trade against. 

• A lower high forms when price bounces, finds local resistance and rejects;

• A higher low forms when this rejection doesn’t lead to a new lower low.

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