Not all tops are equal. Some just pull back. Others change the game.
That’s what Part 2 of “When Do Trends Change?” is all about — and July 1 gave us a textbook example of a technical turning point for early trend reversal traders.
Let’s compare the two days side by side:
Here’s a copy of the image I wrote about on June 27th: When Do Trends Change: Part 1
June 27: The Build Up
RSI divergence appears
Price makes a new low, but RSI is still hovering around 40
Missing key context: no significant supply nearby, and unknown if next high is below 60 on RSI.
Result? A pullback, not a reversal
👉 This is the kind of move that shakes out weak hands — but let’s us know phase one is in process
Now we can see ES 48 trading hours later and how it’s evolved.
July 1: The Real Signal
RSI divergence again
This time: a second high fails below 60 on RSI
Rejection occurs at 6363, a known Critical Reclaim Area (CRA)
Momentum confirms — RSI doesn't even try to reach the prior highs
📍This is the structural reversal signal.
The kind that doesn't just reject price — it traps late buyers and transitions the trend.
🟢 July 1: The Real Signal
RSI divergence again
This time: a second high fails below 60
Rejection occurs at 6363, a known Critical Reclaim Area (CRA)
Momentum confirms — RSI doesn't even try to reach the prior highs
📍This is your structural reversal signal.
The kind that doesn't just reject price — it traps late buyers and transitions the trend.
To spot real trend changes, you need more than just divergence.
Traders like me have the all clear to short…
…But, only at levels that fit our strategy.
You need structure.
You need momentum confirmation.
You need to know where the trap is being set.
July 1 delivered everything we need to be comfortable with setups that arise
It’s not hindsight — it’s repeatable pattern recognition.
Now what?
I’ll be looking for our setups for a potential short execution. I’ll be delivering those to you as they come to be
When Does This Get Violated?
Simple.
If a new high is made and RSI is above 60, we will have created a new string of higher highs and higher lows.
Using technical reversal signals are a single tool in the toolbox. But like anything else, it’s not the end all be all. It’s critical to trade only when the core strategy setups display themselves and when the odds are stacked in your favor.
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