Understanding the EMA50 RT

Reversal Triggers depend on failed continuation...

The more we understand about price action, the easier it becomes for us to fool ourselves into believing that we know what is coming next. We don’t. We have to keep a close pulse on what price is doing and where it is coming from, otherwise we may mistake an actual breakdown for a reversal. We should never forget that although we have a system based expectation, price still has to meet our parameters before we can actually participate in any directional move.

Experience in the Discord showed me that when the EMA50 Push is done, readers automatically EXPECT the EMA50 RT, while the EMA50 Push is actually a high probability sniper entry into an attempt at trend continuation, and the EMA50 RT is not a given.

Always keep your eyes on what the chart tells you.

The EMA50 RT is by far the most interesting Reversal Trigger, but its setup relies on the EMA9 rejection failing after the EMA 50 Push RT.

In other words, when an EMA50 Push actually succeeds to produce a new EMA9 trend, it resets the EMA Dance and the subsequent bounce is a backtest instead of an EMA50 RT.

All our setups depend on failed continuation, be in in the form of a failed breakdown or a higher low. We have to stay alert and distinguish between continuation and failed continuation, otherwise the market will simply humble us by taking our 1R.

Confusion about the EMA50 RT

It is important to remember that an EMA50RT becomes relevant when an EMA50 Push rejects price and attempts continuation of the underlying trend.

In the chart below, we see a downtrend and a retrace into EMA50 where the EMA50 Push sent price looking for continuation of the trend. As per my instructions on these concepts, EMA9 has to lead now.

ONLY the FIRST backtest of EMA9 can set up an EMA50 RT. If price continues the trend after that first backtest, then we have to stop looking for an EMA50 RT and look for a new EMA9 reversal instead.

Allow me to illustrate with an example.