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Identify Trend
Identify Trend
Higher Highs / High Lows
Lower Highs / Lower Lows
Break of Structure
Break of Structure
In a bullish trend, each time we break a higher high we have a Break in Structure (BOS).
In a bearish trend, each time we break a lower low we have a Break in Structure.
Candles that 'break' a higher high in a bullish trend and a lower low in a bearish trend should have a large candle on volume that is higher than the previous day.
See the candles that break the previous Higher High (circled)
Each candle is a large green candle and has higher volume than the previous day
In many cases, the volume far exceeds the average volume
While we prefer a > average volume, there should be at least the average volume for it to see a sustained move
Change of Character
Change of Character
As our trends start to plateau (consolidate/range), we will see price retracing back to previous lows
When we see a close below our previous low we have a Change of Character (CHOCH)
We want to see a strong candle closing below our previous pivot low with strong volume
The chart below shows a close below the previous low on higher volume
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