Trends and market structure

"The trend is your friend" only helps if you can tell what the trend is. The cleanest way is market structure: the sequence of swing highs and swing lows.

The three states

• Uptrend: higher highs (HH) and higher lows (HL). Each pullback stops above the last one.
• Downtrend: lower highs (LH) and lower lows (LL).
• Range: highs and lows roughly at the same levels. Price bounces between support and resistance.

Break of structure

In an uptrend, the first warning is a lower high. The confirmation is a break below the last higher low. That is called a break of structure, and it is often the moment a trend changes. The same applies in reverse for downtrends.

Trading with structure

• In an uptrend, look to buy pullbacks into support or the previous higher low, not breakouts at the top.
• In a downtrend, look to sell rallies into resistance.
• In a range, buy near support and sell near resistance, or stay out until it breaks.

The Greenback Analyst does this automatically: open the Analyst tab on any chart to see the current trend, its strength and the key levels.