65-Day Academy · Day 4 · Foundations
Defining a Trend — Higher Highs, Higher Lows
The only trend definition you need
Uptrend: a sequence of higher highs (HH) and higher lows (HL) — each rally exceeds the last peak, each pullback bottoms above the last trough. Downtrend: lower highs (LH) and lower lows (LL). Range: neither — price oscillates between defined ceilings and floors. This is the backbone of all technical analysis; every fancy pattern reduces to it.
Why it works
Structure reflects order flow. In an uptrend, buyers step in earlier and earlier (higher lows) because they fear missing the next leg; sellers keep getting overwhelmed at higher prices (higher highs). The trend is in force UNTIL the sequence breaks — a pullback that undercuts the last higher low is the first objective evidence of change. Not a guarantee of reversal — evidence of change.
Timeframe relativity
A stock can be in a daily uptrend and a weekly downtrend simultaneously — trends are timeframe-specific. Always declare your timeframe before reading structure. The higher timeframe sets context; the lower timeframe sets entries. Conflicting timeframes = uncertainty = smaller size or no trade.
What you'll practise
A stock's last 6 swings: HH, HL, HH, HL, then price rallies but stops BELOW the prior high, then breaks BELOW the prior higher low. What structure change is this?
20 XP in the app · intermediate
Sources
- Trend DefinitionInvestopedia
- Smart Money Concepts (SMC)Trading education — Inner Circle Trader framework
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All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.