In the Trend Hunter Strategy, knowing when a trend has ended lets you lock in the open profit of your Free Trade and any remaining targeted orders before the market reverses. A daily trend ends in one of two ways: a new opposite-direction forecast or a valid daily break of the daily pivot line.
1. When a new forecast announces an opposite trend?
The final fixed take-profit target sits at a major structural barrier where the current trend is likely to slow down or end. Sometimes reversal signs appear even before price reaches that final target.
When the probability of a reversal rises, Saturday's Weekly Forecast announces the likely start of a trend in the opposite direction (Forecast: Beginning of Up Trend or Forecast: Beginning of Down Trend). As soon as that opposite forecast is published, you close all remaining open orders from the previous trend by hand. Those orders include your untargeted Free Trade (Soft TP) and any fixed-target orders (Hard TP) that have not hit their targets yet.
Trend-end exit on EURAUD daily (Figure 1): On 2013-11-07, after a daily Hammer formed in the Buy zone, we opened 7 targeted Buy orders (Hard TP) and 1 Free Trade (Soft TP). Five orders hit their targets by 2013-12-17 for 3315 pips. On 2013-12-21, the weekly forecast announced a likely Beginning of Down Trend, so we closed the 6th and 7th orders and the Free Trade by hand for another 3369 pips (6684 pips in total). The new Sell zone then blocked price advances for three months before the downtrend started.
2. The horizontal daily pivot line?
Continuation forecasts draw a horizontal daily pivot line on the daily chart. In an uptrend, this pivot line sits at the key structural support level. In a downtrend, it sits at the key structural resistance level.
As long as price stays on the trend side of the daily pivot line, the current trend remains valid. If price breaks the pivot line on the daily chart, the continuation forecast is no longer valid and you close all open orders immediately.
Three rules for a valid break of the daily pivot line?
An intraday shadow piercing the pivot line does not count as a break. A break of the trend-end pivot line is valid only when all three conditions hold on the daily (D) timeframe:
Complete daily candle close: A full daily candle closes beyond the pivot line.
The 80% body rule: At least 80% of the candle body sits beyond the pivot line.
A healthy candle: The breaking candle is a healthy candle with a normal, long body, not a reversal candle or a Doji.