The trend is your friend (2)

Trend pattern


A pattern of

i) higher highs and lows depicts an uptrend,

ii) lower highs and lows depicts a downtrend and

iii) comparable highs and lows depicts a sideway pattern.


The shortcoming with this method is we need at least 2 highs and 2 lows.


The trend would have been too far underway for us to take advantage of.


To overcome this we can anticipate the 2nd high or 2nd low by looking at technical clues, e.g. reversal candle patterns, take-out of previous high or low etc.

Next draw a trend line connecting the lows when the lows are getting higher or highs when the highs are getting lower.

When the trend line is up the trend is up and when it is pointing down the trend is down.