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I notice that most of the posts do not mention much about factals. A big puzzle (say a 30-minute bracket) breaks down into little puzzle rotations (say a 30 second). I have made a trading decision to focus on that fractal as my "skill set".
In order to understand trends I had to first start in the micro in order to understand the macro. One size does not fit all.
If anyone is familiar with Thomas DeMark whom I believe has answered that question. You can get his tools on COQ premium service or Bloomberg for $500 per month plus $3,000 to $5,000 per month for the premium services.
ORRR read his books.
I think he gives 2 answers to the question. First a pullback is usually in the 50% range of the prior move on close of the current bar. If it closes beyond .618 then it is something else.
The second method is where to place your stop. He recommends counting four bars back and the close of that bar is your stop. If the current bar closes below that prior bar, close your position. Keep doing that until it resumes the trend or you get stopped out.
If anyone has python and or "R" programing and familiar with MySQL we can try to verify the above. If this is of interest PM me.
There are many ways to determine if the market is in a reversal or a trend. The main reason it is hard to judge depends on the time frame or tick chart you may be using, example the market can be going down on a 500 tick chart , up on a 2 minute and down on a 5 minute. I personally look at a 60 minute 240, and a daily for long term direction weather up or down. Depending how much time I have to trade determines which chart I will be using and along with a entry chart.
There is a fantastic video by Thomas Wood on understanding price action , it is clearly a eye opener, which explains what you may be looking for.
The answer, to the trend reversals question, unfortunately, is all in the mind of the beholder.
If you go back in time, the Guru of Dow Theory, after Charles Dow died in 1902, was W.P. Hamilton, who succeeded Dow as the Editor of the WSJ.
In 1922, (20-years later, enough time to learn the ropes of Dow Theory and get real) Hamilton published his own Market Barometer book (1922) and he suggested all knowledge of how the stock market functions was contained therein.
Later, Hamilton predicted a major trend reversal had occurred on the DJIA in early 1926. It was three years before the 6-year bull market eventually topped out on the DJIA, on 3 September 1929.
However, in his first book Hamilton downplayed the informational content of trading volume. In addition, it was not until October 1928 that low and high prices on the DJIA averages became available so you could not earlier intuit the meaning of time, price and volume, to interpret the markets. Accordingly, to that time, Hamilton appeared to be relying only on changes in closing prices and largely ignoring relative volume up to October 1928.
Another subsequently well known trading guru - H.M. Gartley, writing in 1935, (I suspect using a bit of hindsight) suggested Hamilton's 1926 Market Major Reversal call was a "Big Mistake", and he then gave his personal interpretation of Dow theory to suggest 3 or 4 reasons based thereon, why Hamilton got it wrong. But these reasons, still did not refer to interpreting relative trading volume.
In later years. W.D. Gann, reviewing the same time period, as part of his stock market course interpretation of the DJIA 6th Bull and 6th Bear markets, would suggest, (without out referring to Hamilton's interpretation), that it was a period showing a "pullback in a bull market".
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