Role reversal is price action pattern that is very favorite to newbies due its simplicity. Requirements are nice swings and trending markets which offers us lots of entries.
I bet you have heard about role reversal (RR.) and more than 50% of corrections could fill up requirements of RR if you would look closely. This pattern contains support and resistance level which are necessary for properly trading.
As we mentioned in this article, market tends and respects important areas of price.
Role reversal means that support turns into resistance and vice versa.
Let’s move to practice.
Before moving to file number two with drawn role reversal pattern, study swings above and try to see the pattern on your own.
How many RR’s did you count?
Note: Please read requirements included in post above, if you are having problems with zooming, let’s write that down
Requirements for successful trading Role Reversal pattern:
- Angle < 45 °
- Trending market – strong up/down trend
- Nice swings
- Price touches areas more times (this rule does not need to be kept)
How to trade role reversal
As you can see, RR is tradable pattern if you know what you are looking for. I strongly recommend backtest few markets to find the right, tradable one.
How to backtest trading system? Read here.