The 3-Step Method That Predicts a Change in Trend
The three steps are:
1. A trendline is broken.
2. There is a retest and failure.
3. Price falls below the prior low
These three steps define a stock that has moved from an dowtrend to a uptrend. Learn these three steps and you will never trade on the wrong side of the trend again.
Step 1. A trendline is broken
Step 2. There is a retest and failure
We know that a stock in an downtrend makes lower highs and lower lows. When a stock fails to do this, we should be begin to question the trend. This stock has now tested that prior low - and failed. So, this stock is no longer making lower lows. But, it is not making higher highs either!
So far, there is no confirmation that the trend has changed.
Step 3. Price rises above the prior high
The three steps are:
1. A trendline is broken.
2. There is a retest and failure.
3. Price falls below the prior low
These three steps define a stock that has moved from an dowtrend to a uptrend. Learn these three steps and you will never trade on the wrong side of the trend again.
Step 1. A trendline is broken
So far, there is no confirmation that the trend has changed.
Step 3. Price rises above the prior high