You already know a little bit about trends and how the market moves in terms of HH,HL,LH & LL. The market is in a constant cycle of either trending upwards, downwards or consolidating/ranging.

‍

Notice how when the market goes from printing HH and HL to a LH and a LL. The trend shifts.

‍

Uptrends

‍

Since the market doesn’t look exactly as clean as the diagram above, here is a live example of how to identify a trend while viewing candlesticks. Again, price action, or the market trend, is considered bullish when higher highs are constantly being formed and previous lows are sequentially becoming higher lows.

‍

‍

Downtrends

‍

Price action or the market trend is considered bearish when lower lows are constantly being formed and previous highs are sequentially becoming lower highs.

‍

Always be aware that when price is in a bullish trend, UNTIL previous lows are broken, the current candle can flip upwards at ANY given point.

On the converse, in a bearish trend, UNTIL previous highs are broken, the current candle can at any point, flip downwards — this is why we wait for confirmations before entries!

Trends don’t ALWAYS align even on the closest time frames — you’ll often find the daily isn’t always matching up to the trend of the weekly or the hourly time frame moving differently to the 4-hour.

This is because a trend change starts on the lowest time-frame and works its way up the time scale.

It’s important to take entries in line with the trend because trend is like the current of the ocean that is — trying to swim against is setting yourself up for failure.

‍

Fundamental lesson here:

Aim to let the market establish a trend; come in second place with your entries.

Trying to jump the gun in predicting trend reversals before they happen is a slippery slope towards unhealthy trading habits such as revenge trading — it’s simply far too difficult to do consistently. In staying disciplined, you’ll maintain a healthy position both financially AND mentally.

‍

Identifying a bias:

To identify a bias we move back to the top-down analysis we spoke about earlier in the course. Higher time frames hold more weight when dictating price. This means higher time frame supports, resistances, candle closures etc, are more important and stronger than lower time frame supports and resistances. A 4 hour support/resistance will give more reaction than a 1 minute support. It is also important to note that the time frames of bias you’re using should be relatively close to the execution time frames you use for a trade. For example the yearly time frame will not be all that relevant for someone looking to execute on a 5 minute time frame or scalp 20 pips for the day but will be useful to someone trying to take a monthly position.

‍

To identify a bias for our strategy we first look at the weekly time frame. 

• What happened last week? 
• Did we tap any major levels of support or resistance? 
• Did we close above or below any ranges? 
• Did we reject any areas of interest? 

‍

Let’s say the weekly time frame closed above a range, we now can anticipate this week to create a bottom wick and drive up. The bottom wick may look like a day or two of bearish (red) daily candles, or it may all happen within one daily candle; we don’t know this is why we zoom in more.

Next we look at the daily time frame, and again ask all the same questions. 

Did we hit support/resistance close above/below any zones

Was the previous daily candle bullish or bearish, etc. 

‍

The daily time frame is what we primarily base our bias of the day off of, as MarketControllers (CFX community).

‍

Since we are scalpers here at ControllerFX, we base a lot of our biases for the day based on the daily time frame. Did it break into a range or reject a support/resistance. In which direction? If we are expecting a bullish day from a closure above a daily resistance level we would be looking to take long positions (buy) on the lower time frames, such as the 1h/30m/15m as we continue to break above minor resistances.

To truly understand this you can show up to the free daily livestreams and go through Don’s daily analysis usually done near the start of the stream. I highly recommend this and watching the streams in general after the course because it will give you real time hands on training and insight into trading.