Flashcards

Trends

Mitul Patel Trading English 18 cards

Cards in this deck (18)

1Uptrend - DefinitionAn uptrend comprises a repeating sequence of:
1) An upward extension
2) A swing high
3) A downward pullback
4) A swing low
2Uptrend - Features1. The price extensions are longer than the pullbacks.
2. Extensions will break above previous swing high, reaching new price highs for that trend.
3. Pullbacks will not break below previous swing lows.
3Uptrend - Illustration
4Uptrend - EndWhen price breaks the swing low which leads to the highest swing high of the
trend.
5Uptrend - not Ended
6Uptrend - S/D and Trader DecisionsTBC
7Downtrend - DefinitionA downtrend comprises a repeating sequence of:
1) An downward extension
2) A swing low
3) An upward pullback
4) A swing high
8Downtrend - Features1. The price extensions are longer than the pullbacks.
2. Extensions will break below previous swing low, reaching new price lows for that trend.
3. Pullbacks will not break below previous swing highs.
9Downtrend-Illustration
10Downtrend - End
11Downtrend - not Ended
12Downtrend - S/D and Trader DecisionsTBC
13Sideways Trend - Definition1. A series of price swings existing within the range of a significant upper resistance area and a significant lower support area.
2. The range support and resistance
boundaries (range lower and upper boundaries) may be formed from either higher timeframe S/R and/or significant trading timeframe swing highs or lows
14Sideways Trend - Illustration
15Sideways Trend - Start
16Sideways Trend - End
17Sideways Trend - S/D and Trader DecisionsThe defining price swing has established a lower price area (support) at which traders perceive a
good buying opportunity. Until sentiment changes within the market, price movement towards
this area will result in new longs entering the market, and shorts taking profits after having
profited from the move down. This bullish orderflow will overcome any bearish orderflow and
price will rally to remain within the defined range.
The opposite occurs at the upper price area (resistance) which traders perceive as a good selling
opportunity. Until sentiment changes within the market, price movement towards this area will
result in new shorts entering the market, and longs taking profits after having profited from the
move up. This bearish orderflow will overcome any bullish orderflow and price will fall to
remain within the defined range.
18Change of Trend (Objective vs Subjective)Tests of the areas of objective trend change are great sources of information about the future trend.
Subjectivity allows for breaks of definition – relying on these breaks to show the way forward, through how price reacts at these key times.