Simple method how to determine the market trend

Essential part of succes in the market is to have an accurate method how to determinate the market trend. Even there was invented many methods, how to determinate trend with indicators, I think they are too lagging and retail traders are teached to use it by market makers to suffer a loss faster. Or is there anybody who can imagine, that institucional pro-traders in banks or hedge funds use that colorfull stuff to trade milions of USD?

Probably, it is not suprise for you, that I use simple price action to do it. Basic of this method are swings and their behaving and parametres. As you can see on screenshot, there are four basic types of swings –higher high swing, lower high swing, higher low swing and lower low swing. It is not anything revolutionary for advanced traders.

But we can divide them a little bit more. There are „weak“ and „strong“ swings.

Here you have definition for bull swings, bear swings are vica versa.

Strong swings: move from low of this swing exceed high of previous swing and price stay without problem at least two candles (close > open).

Weak swings: move from low of this swing is not enough powerfull to get over previous high and stay there at least two candles (close > open).

I have tagged just bull strong/weak swings on screenshot.

How can we determinate trend from this? It s simple! (After you learn how to recognise HH, HL, LH, LL and their w/s quickly and accurately)

Everybody can see that on screenshot, there were uptrend, but how can we recognise when it is over in moment, when we actually trade that? How can we recognise, that new trend already started?

Trend up/down is until the last support of that trend is not broken. And support of trend is S/R level (low for uptrend, high for downtrend) from which started strong swing. For example highlighted area number 1 and 2 on the screenshot are not begins of new downtrend because even the market did new low, it did not get over last suport of trend. So uptrend was broken in highlighted area number 3.

I use this method for trend determination on any timeframe, but I ever trade on smaller timeframe. Me personally, I use 5m/1h and 4h/1d.


Author: jakub 



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