Termination conditions that are likely to stop the trend
This section will help you define when the trend is likely to stop
Termination conditions are likely to stop the current trend. One significant rule for high probability trades states that you must double-check that the market is free of termination conditions before you trade. If you trade into a termination condition, you will lose more than win. Now will be the time you apply your trigger line strength and location lessons learned previously at each Fibonacci area.
click to enlarge- termination conditions defined

Fibonacci and Trigger Line Location

Fibonacci is the primary framework for Nexgen traders. When the price reaches Fibonacci, you must analyze your trigger lines for strength and location. The trend is likely to stop if the trigger lines are not located below Fibonacci support. Remember: the location of triggers is the key.
click to enlarge- Termination of trend at Nexgen Software Services Fibonacci Software Areas

Prior Divergence Lines- AKA "Pivot Stop Out"

Comparing the divergence line with the trigger line location is very important when deciding if a line will be a good termination condition that may reverse the trend.
When the price is touching a divergence line, this will be referred to as a "pivot stop out," or a "divergence stop out." Simply meaning price "tested" a prior high or low and failed. Visually easy to recognize. Take notice of the trigger line location, relative to the divergence line, at the time of the pivot stop out at the low. Triggers are above the divergence line, and the small triggers are above the large triggers; this look will make the market reverse the trend and go up.
click to enlarge- Termination of trend at Nexgen Software Services Fibonacci Software Areas
This pivot stop-out of a prior divergence high is most powerful when it happens at a Fibonacci area that has no trigger lines above it. Notice the trigger location at the high price.
click to enlarge- Termination of trend at Nexgen Software Services Fibonacci Software Areas

Yellow one-to-ones

The chart below has an example termination of the trend at the yellow one-to-one dots. Again, pay particular attention to the fact that the small triggers are not below the one-to-one price. It is worth noting that after the one-to-one holds, the market starts the trigger line bottoming routine. A few bars up, the price touches the mid-band, then the price goes down to, touch, "test" the large trigger after they roll up. At which point you will start looking for trend trade longs.
click to enlarge- Termination of trend at Nexgen Software Services Fibonacci Software Areas

Multiple Divergences at the Same Price Level

When there are three divergences in the same price area, this termination condition will likely stop the trend, regardless of the size or time of the chart.
click to enlarge- Termination of trend at Nexgen Software Services Fibonacci Divergence Conditions
Three divergences in a relatively tight range will make a strong reversal of the market most of the time. The following example of a larger chart with three divergences. Notice the subsequent move breaking the first couple of Fibonacci supports.
Large chart termination makes larger reversals
Small chart patterns that will terminate the trend are as follows in the picture below. Never take a trend trade into one of these patterns. Use these patterns to fine-tune your Fibonacci and trigger line analysis.
5-1 chart chart termination conditions
The following picture shows the termination of the trend when there is T3 Divergence at a Fibonacci area, while at the same time the trigger lines did not pass beyond the Fibonacci. This will terminate trend trades until the Fibonacci changes state from Blue to Red or Red to Blue.
small chart divergence at Fibonacci areas
In the example above, the Fibonacci area requires a breakout and state change of color. The picture below illustrates the required state change from Fibonacci red resistance to Fibonacci Blue support with trend trades rules being true. This is the look for when it is ok to resume the trend.
After Fibonacci changes state from red to blue for trend continuation
Sometimes the small chart fails before the strength in the larger 13-2 chart does. You will need to recognize this and manage your trades appropriately.
Trend termination based on smaller charts vs strong triggers
Last modified 3d ago