When has the market finished correcting?

[mark8par]

I was curious to find how other traders deal with market corrections,

Have you ever been watching a currency pair and waiting for the correction and PA signal so you can then get a piece of the action only to find that it corrects gives a good signal, you enter the market and it corrects more hits your SL, it then continues in the direction you originally wanted

I would like to put the question out there and find out how other Traders work out when a market has corrected fully or if its possible at all.

I would use the EMA ( 20 preferably) and also swing points, plus a good PA candle.

Thanks

Mark

 

[coachfx]

That's a good question Mark. I'm not sure it's possible to work out when a market has completed a correction because you are essentially always taking a trade against current momentum (short trend - long correction - short signal against the correction). Over the years I've found it's easy to tie yourself up in knots trying to guess and second guess market conditions (don't even get me started on how I used to let news events affect my analysis!) so my plan of action has been to always look at the strength of the signal and the confluence surrounding it. 20EMA, swing level and a strong close to the signal are all I need to feel I have an edge in any potential trade.

 

[mark8par]

Thanks Coach, i was just curious to hear how fellow members deal with it

 

[tjenarvi]

I think, IMO, the market presumably / likely to finish its correcting, after printing a nice PA signal at the previous broken sup/res and/or swing point/high/low.

Before taking the decision after we presume the correction would finish, ideally we should see first a nice strong impulsive trend, then we should always look for price correcting to retest the previous broken sup/res and/or swing point/high/low, and then printing a nice PA signal (I prefer weekly chart), so no EMAs is also fine for me.

In short, we should always find to enter the price at a nice value (buy cheap price when it's uptrend, sell expensive price when downtrend).

Best

 

[TheForexGuy]

I think one big factor here is where price is correcting from. If the market is correction for normal looking trend swing highs and lows, then you will most likely see trend continuation. But, if the market is correcting from extreme prices, where there was a large gap in the mean - generally we will see that correction momentum continue, possibly break a few levels, break the mean value and even develop into a new trend.

My point is traders should be vigilant when trading against correction moment, or mean reversion momentum that originated at extreme prices from the mean. Think of pulling a sling shot back, then letting it go.