Market structure
Trend structure: higher highs and higher lows
An uptrend is a run of higher highs and higher lows; a downtrend is lower highs and lower lows.
How the thing is defined. There is nothing to test.
The structure is a definition. Whether trends persist is covered in how-often-markets-trend and trade-with-the-trend.
What it is
Swing points are the turns in price. In an uptrend each swing high and swing low sits above the one before. A trend is called broken when price closes beyond the last swing that held it in place: below the last higher low in an uptrend, above the last lower high in a downtrend.
What it suggests
The definition needs a choice of how big a swing must be, so two traders can call the same chart differently. State the choice.
How to check it
Mark the swings on a higher timeframe, note the last swing that would break the structure, and name that price.
Common mistakes
- Calling a trend from a few candles.
- Changing the swing size to fit the answer wanted.
Related lessons
Written in our own words. Education only, not financial advice.