Downward trend? Hmm? Upward trend?

First, I must apologize.

To grab attention, I deliberately chose a strong title.
If I caused anyone discomfort, I’m sorry.

However, in this article, I intend to deliver what truly matters.
I would be grateful if you read to the end.

The price has fallen.
I sold because I thought it had changed to a downtrend.

At that moment, it moved in the opposite direction.
After taking a stop loss, the price rose again.

If you have repeated this many times,
I must tell you something tough.

You judge the trend by the direction of price movement.
Because it is falling, it’s a downtrend. Because it is rising, it’s an uptrend.

That way of judging is wrong.

■ Check whether it applies to you

□ When prices start to fall, you think “the downtrend has started.”
□ You cannot explain in words the criteria by which the trend changes.
□ Every time you look, your judgment of up or down changes.
□ When you enter thinking “the trend has changed,” the price returns to the original direction.

If two or more apply, what is written in this article is the reason for your losses.

■ Even while it is falling, an uptrend is not over

In an uptrend, prices do not move straight up.
They go up, then down, then up again.

If you look at this “going down” part,
you may judge that the downtrend has started.

However, that dip could be a pullback in an uptrend.
If it is a pullback, after the decline, the rise begins again.

Prices are falling.
That alone does not define a downtrend.

■ Trends are determined by “highs and lows,” not by “direction”

So, how do you determine the trend?

The answer is highs and lows.

An uptrend is when
the highs are being updated and the lows are rising as well.

Therefore, even if the price falls
as long as the lows have not broken downward,
it remains within an uptrend.
That decline is merely a pullback.

An uptrend can be said to have ended only when the price breaks its lowest point downward.

That might sound a little harsh, but
to judge “it’s a downtrend because it’s falling”
is like assuming a stopped car is in a parking lot just by seeing it stopped before the red light.

So, in actual charts, which highs and lows should you look at?
Where do you break to say the trend has changed?

From here on, I will explain carefully using actual chart videos.

■ Explanation video