②Principles: The importance of "Definition of Trend" and "Turning Signals"

In Dow theory, when interpreting the movement of price action itself,

what is particularly important isthe “Definition of Trend”,

as traders around the world determine trends based on this.

The “Definition of Trend” is

formed by the movement of the market’s price action creating“peaks”and“valleys”in its zigzag.

It is determined by their relative positions.。

Uptrend: with consecutivehighs “peaks” being updatedand consecutivelows “valleys” being raised

Downtrend: with consecutivelows “valleys” being updatedand consecutivehighs “peaks” being raised

By the way,updating of high “peaks” andlow “valleys” may not occur at all,

there are periods of lateral movement where selling and buying pressures balance—an “trendless”condition.

If that condition lasts for a long time, the pressures from both buyers and sellers rise,

and when it breaks to one side, the momentum tends to increase,

so following it can be very effective.

Price movement is affected by

the balance of supply and demand; when the balance shifts toward one side,

the resistance in the direction of movement is more easily broken.

Movement that aligns with the direction tends to be at a relatively sharp angle“acute”,

Movement that does not align with the direction tends to have an angle that is“obtuse”,

more gradual.

From the movement itself,

not only the market direction but also the latent momentum can be read,

and this becomes a very important criterion when entering.

In the figure below, to capture ③, the angles of ① and ② (especially ②) are informative.

If during the decline attempt at ② the price does not come down, or if it is in a trendless state,

the probability of a strong rise in the next move (③) increases.

“Reversal Signals” that indicate the end of the “Uptrend”

Left figure below:Cfails to update its high relative toA,and at the moment it falls below the low ofB (confirmed)

Right figure below ①:C updates its high relative toA, butD falls below the low ofB (unconfirmed)

Right figure below ②:E fails to update its high relative toC, andD falls below the low of (confirmed)

“Reversal Signals” that indicate the end of the “Downtrend”

Left figure below:C fails to update its low relative toA, and at the moment it surpasses the high ofB (confirmed)

Right figure below ①:C updates its low relative toA, butD rises above the high ofB (unconfirmed)

Right figure below ②:E fails to update its low relative toC, andD rises above the high of (confirmed)

those reversal signals that indicate a change in that trend.

All of these, in some form,

influence essentially any form of technical analysis, so

it is desirable to deepen your understanding of them.