The Best Trend Guide You'll Ever Find! [3 Different Methods]
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In this video, I'll give you the ultimate guide about trends. I will teach you three methods
for trend identification. You will completely learn how you can use pure price action to
identify trends and trend changes. Then I will introduce some price action indicators that
identify trends based on price action concepts. And finally, some momentum indicators that can
help you with identifying trends. But before we start, if you like my contents, please support
the channel by liking the video and subscribing to my channel if you haven't subscribed yet.
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Alright, let's begin with identifying trends by the help of price action. In financial markets,
at any given time, the market can be in two situations, either trending or not trending.
And when it is trending, it can be either uptrend or downtrend. In uptrend, the price is generally
going up and in downtrend, the price is generally going down. But this going up or down doesn't
mean that the price go all the way up or down in a straight line. No, there is always counter
trend movement. For example, here, the general direction of the price is up, but there are times
that the price was moving down. So in an uptrend, we have a structure like this, the price goes up
and then a little bit down, again goes up and then a little bit down. So in an uptrend, the price
makes higher highs and higher lows. You can clearly see that every high is higher than the previous
high, and every low is also higher than the previous low. So in an uptrend, the price makes
higher highs and higher lows. And this is the structure of an uptrend. As long as the price
makes higher highs and higher lows, we say that the market is in an uptrend. And you can draw
uptrend line by connecting the higher lows. Trend line is not necessarily a line, and it can be a
zone. And again, not necessarily a linear zone. The important point is that every low is higher
than the previous low. So as long as the price is making higher highs and higher lows, we say that
the market is in an uptrend. But if the price fails to make higher highs, it is a signal that
probably the uptrend is weakening. For example, here you can see that the price couldn't pass the
previous high and then went down. This is a signal that probably the uptrend is ending, and maybe a
reversal is going to happen. But until now, we just have a signal on the weakness of the uptrend,
and the structure of the uptrend is not broken yet. If the price breaks the last higher low and
goes below this level, the structure of the uptrend is broken. And it is a stronger signal now that the
uptrend probably ended. The price may go to a trading range, or a reversal may happen, and
starting of a downtrend. In a downtrend, the price makes lower highs and lower lows. Every high is
lower than the previous high, and every low is lower than the previous low. This is the structure
of a downtrend. And as long as the price is making lower highs and lower lows, the market is in a
downtrend. The structure of the downtrend is broken when the price goes above the last lower high.
This is a signal that probably the downtrend ended, and the price may go to a trading range,
or a new uptrend may start in the market. Until now, you learned how you can identify trends by
the help of price action. I explained the structure of an uptrend and downtrend. So you know that if
the price is making higher highs and higher lows, the market is in an uptrend. And if the price is
making lower highs and lower lows, the market is in a downtrend. And if the market is not in these
two conditions, and you cannot see the structure of an uptrend or downtrend, the market is not
trending. Alright, now I want to introduce two price action indicators that by the help of price
action concepts, they help you with trend identification. But before that, I'm proud
to announce that I have published a book, The Art of Price Action Trading, which is a complete guide
to price action analysis. The link is in the description, and you can get it later if you
want to master price action trading. Alright, let's add the first indicator. Here, we click
on indicators, and we search trend lines version two, this one, which is written by Lonesome the
Blue. Alright, when you add this indicator, if there is an identifiable trend based on the
conditions that I explained earlier, the indicator tries to add the best trend line for the current
trend of the market. This is useful to give you an idea if there is already a trend in the market
or not. But if, for example, there is no trend in the market, and the price is in a trading range,
the indicator also doesn't show any trend line. Because for example, here, you can see that the
price is not moving in the structure of an uptrend or downtrend. So there is no trend in the market.
Alright, now let me introduce the second price action indicator. Here, we click on indicators,
and we search adaptive trend finder, this one, which is an editor specs indicator and written
by Julian Exe. Alright, when you add this indicator, it identifies the current trend,
and it tries to draw the best trend channel for the current trend of the market. By default,
it is doing it for the current short term trend of the market. And if you go to the settings of
indicator, here you can see that there is an option use long term channel. And if we turn this
on, the indicator identifies the longer term trend of the market and shows a trend channel for this
longer term trend. This is one of the best indicators on trading view that can help you
with identifying trends and the general direction of the market in two perspectives, short term and
long term. Alright, now let me introduce momentum indicators that can help you with identifying
trends. Let me add the first one. Here we click on indicators and we search MACD, this one,
moving average convergence divergence. But we need to change its settings because MACD with
the default settings is not suitable for trend identification. So here we go to the settings of
MACD. And here for the fast length, we set it at 100. For the slow length, we set it at 200.
And here for the signal length, we set it at 50. And then we go to the style tab, and we remove
the MACD line and signal line because we only need the histogram. Alright, with the settings that we
made, now MACD can effectively help us with trend identification. When above the center line and
green, the market is trending up and when below the center line and red, the market is trending down.
Alright, now let me add the second indicator. Here we click on indicators and we search CCI,
this one, commodity channel index. But this is not only for commodity market and you can use it
in any market. For trend identification, you need to change the settings. So here we go to the
settings of the indicator. And here in the input step, here for the length, we set it at 100.
CCI with length of 100 can effectively help you with trend identification. When CCI line is above
the center line, the market is in an uptrend. And when CCI line is below the center line, the market
is trending down. Alright, let's add the next indicator. This one is actually a volatility-based
indicator and ATR is used in the calculation. Here we click on indicators and we search pivot
point supertrend, this one, which is an editor specs indicator and written by Lonesome the Blue.
This is a newer version of supertrend and in compared to the original version of supertrend,
it performs better. When the line is above the price and red, the market is trending down. And
when the line is below the price and the color is green, the market is in an uptrend. Alright,
in this video, I explained three methods for identifying trends. First, I explained price
action method and then I introduced two price action indicators. And finally, two momentum-based
indicators and one volatility-based indicator that can help you with identifying trends. Alright,
that's it. Thank you for watching this video. If you have any questions, feel free to ask and leave
a comment for me. I'll answer your questions as soon as possible. If you haven't subscribed
to my channel, please subscribe and hit the bell so you get the notifications of my new videos.
See you guys in next video and good luck with your trading.