How to define a trend using market strucutre?

CHAPTER 2 CYCLE AND MARKET STRUCTURE

To understand the financial markets, we need to understand the behavior of the economic cycles.

Our goal is to speculate and make money with the potential direction of prices.

This chapter will seem very basic, but it is very important if we want to understand the market and the next chapters.

Sometimes ,there are things that are taken for granted because they are so simple that we end up not taking them into account. Let's not fall into this error.

You need to unlearn what you have been taught about the market.

First of all we need to know the price structure. If we know the structure, we know what the price is doing at each moment and we will use this knowledge to apply different techniques and tools that will enable us to take advantage of the market in different circumstances.

HOW TO DEFINE A TREND USING MARKET STRUCUTRE?

The direction of the trend is the foundation of success in trading.

Currency’s gain value or lose value. There is a popular saying on Wall-Street that says Do not trade against the trend, the trend is your friend. Memorize this sentence because we are going to bother you with it throughout the book

It’s scientifically proven that you have more chances to win money if you are trading at the same direction that the trend.

When you trade against the trend, the risk increases considerably and the truth is that the risk reward is not very attractive.

Examples of a market phase:

The three types of markets explained below using the only method of trading that uses airforexone which is the price action.

Many traders get complicated when identifying a trend, especially those using indicators. However, the price action is a very simple and effective trading technique that is used to determine trends easily.

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The following examples illustrate the famous Dow theory. As we say, sometimes simple is more effective.

UPTREND: STRONG BUY ORDER FLOW VOLUME > SELL ORDER FLOW VOLUME

The uptrend is confirmed when there are higher highs and lower highs . Once identified, your goal will be to find entry points in Demand zones ( underpriced). This type of action is known as a bullish trend and is identified by a series of mouvements where the high points exceed previous highs.

This market phasephase shows a lot of buy order flow volume > sell order flow volume

We do not want to teach you the same than the others, let’s show you how to define an uptrend , you just need to validate one criteria : Buy order flow volume is higher than sell order flow volume, how to we know that ? by just watching the price move from demand levels. In those zones , buyers add to their positions and create an imbalance moving the price high. Don’t worry if you don’t know about supply and demand , we have many chapters that are going to teach you Everything to become consistent.

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DOWNTREND :

The down trend is confirmed when there are higher lows and and lower lows. Once determined, your goal will be to find entry points in lower highs to sell in Overpriced zones(supply levels). This type of act is known as a bearish trend and is identified by a series of movements where the Sell orderflow volume is stronger than buy order flow volume.

Let’s show you how to define a downtrend with supply levels , you just need to validate one criteria : sell order flow volume is stronger than buy order flow volume, how do we know that ? by just watching the price moving from supply levels. In those zones , sellers add to their positions and create an imbalance

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moving the price low. You can simplify that by recognizing the majority of the candlestick colors.

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