Identifying Reversals after Trends

Here is a simple strategy to follow using Footprint charts. After a trend, either up or down, as soon as a bar closes with net order flow (Delta) in the opposite direction of the preceding bars, consider a reversal at this point.

This is a super easy entry trigger that works more often than it does not. It is best to use it on an order flow based interval, not a time-based interval. Because this is a signal generated by order flow information, we want to remove the arbitrary measurement of time from the equation. Thus, do not use it on a 1-minute or 5-minute chart. Instead, use it on a price-based bar interval like a range bar, or use it on a volume-based bar like a volume bar.

Here is a screenshot from MarketDelta Trader using the Volume Bars available in that particular program:

As soon as the Delta changed after a noticeable decline with all-negative deltas, there was a good bounce of several points. Works on any interval and is a pattern that repeats several times a day.

When volume dries up

Scalping Strategy - Sweeping the Book