Now that we understand the concept of what a trend is, let’s take it one step further.
We will start by examining the uptrend in more detail.
Remember that uptrend is defined as the direction of successive higher tops and higher bottoms.
It looks like a zigzag.
Do you see the picture?

Now the question is, what is the minimum number of tops and bottoms needed to define an uptrend?
Well, the answer comes from Charles Dow himself.

Two successively higher tops and two successively higher bottoms.
Remember, that an object in motion will continue to move in the same direction until there is an opposing force act upon it.
This also reminds me of Newton’s First Law of Motion.
Similarly, an uptrend will continue to move higher and higher until it reverses.
Is it guaranteed 100% that an uptrend will continue to move higher and higher?
But it’s more likely to move higher than to reverse.
I hope it’s clear.

So, what is the more sensible thing to do during an uptrend?
If you said “buy”, then I am with you.
Since the uptrend will most likely continue to move higher, a sell would not be the wisest thing to do, unless you are a contrarian. But that is a different concept.

Now that we have cleared that up, let's examine the downtrend.
I am sure that you will agree with me that a downtrend is defined by successively lower tops and lower bottoms.
How many?
Two lower tops and lower bottoms.
Remember the key word here: Successively.
Successively lower tops and successively lower bottoms.
And, of course, a downtrend is more likely to continue to move lower and lower until it reverses.
It’s like the water in a river flowing downstream.
Isn’t it more likely to keep moving towards that specific direction?

Now, we can place a sell trade to take advantage of this!
See you soon!