Trend basics

Before you look for a single pattern, answer one question: what is this market doing right now? Every chart is in one of three states, and each one demands different behaviour.

• Each rally pushes above the previous peak (a higher high) and each dip stops above the previous trough (a higher low).
• What it means: buyers are willing to pay more each time, and sellers cannot force price back to where it was.
• How to trade it: buy the pullbacks into support, not the breakouts at the top. Bullish candle patterns at a higher low are the highest-probability setups on the chart.
• It is over when a pullback breaks the last higher low — that is the first structural warning, not the whole reversal.

• Each drop makes a new low and each bounce fails below the previous peak.
• What it means: sellers keep accepting lower prices and buyers keep giving up sooner.
• How to trade it: sell the bounces into resistance. Bearish reversal candles at a lower high are the mirror of buying higher lows.
• Downtrends usually move faster than uptrends — fear compresses time, so stops need to respect a wider volatility.

• Highs stop at roughly the same ceiling and lows bounce off roughly the same floor. No new highs, no new lows.
• What it means: buyers and sellers agree on value for now. Most of the trading day is spent here.
• How to trade it: fade the edges — buy the floor, sell the ceiling, target the middle. Never chase the middle of a range.
• Ranges end with a breakout. Wait for a close outside plus a successful retest; the first push through is often a false break.

1. 1Mark the last three or four obvious swing highs and swing lows.
2. 2Read them left to right: are the highs rising or falling? Are the lows rising or falling?
3. 3Name the state — uptrend, downtrend or range — and only then look for a pattern that fits it.