A is the basic direction of prices. You recognize it by the sequence of highs and lows: form an uptrend, lower highs and lower lows a downtrend. If both stay at roughly the same level, the market is in a .
Finding highs and lows
A high is a turning point that the candles before and after it did not exceed; a low is the same downward. Such points are called . Whether a high really was one, you only see a few candles later – until then it is just the highest price so far.
When the structure breaks
In an uptrend, the last higher low counts. If the price closes below it, the sequence is broken. That can be the end of the trend or just a longer pause. A sideways phase can end in either direction.
How this relates to our rule
The page shows the bigger trend through the wave count on weekly candles (), for information only. Market structure helps you read the wave chart: wave 2 is a pullback that does not close below the start of wave 1 – a wick below it does not count yet.