Unit 3 · Level 1 · Charts & Candles
Trends: the market's direction
Zoom out on any chart and price is doing one of three things: trending UP (higher highs and higher lows), trending DOWN (lower highs and lower lows), or moving SIDEWAYS in a range. Identifying which one, before anything else, is chart reading's first job.
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What you get asked
A chart makes higher highs and higher lows, again and again. What is it doing?
Each rally tops the last one and each dip stays above the last dip: a staircase going up. That structure IS an uptrend.
Match the structure to the trend
Three patterns cover every market. You can now classify any chart on earth.
"The trend is your ___" is the oldest saying in trading.
Trading WITH the trend means the market's momentum is pushing your way. Fighting it means betting the crowd is about to change its mind: possible, but expensive to be early.
An uptrend makes a dip, but the dip stays above the previous low. What did the trend just do?
Dips happen inside every uptrend. The structure only breaks when a low undercuts the previous low. Knowing the difference saves you from panic-selling every wiggle.
Read the structure of this chart. What is it?
Higher highs AND higher lows: the definition you just learned, now seen with your own eyes. The pullbacks aren't weakness; they're the staircase.
Now this one. Same skill: what's the structure?
No higher highs, no lower lows, just oscillation. Ranges are where trend-following strategies bleed and patience pays. Knowing which regime you're in comes FIRST.
True or false: trends continue forever once started.
Every uptrend in history eventually ended, and made structure breaks (lower low) on the way. Trends are rides, not promises. One more lesson, then the boss. 🐜
The rest of this unit
Read candlesticks, timeframes, trends and volume: the language of every chart.