WARNING: This might not be a trend!
WARNING: This might not be a trend!

By Emad | honarparvar | 29 Aug 2019

In the Technical and Chart Analysis, the most important step, which is sometime referred as your best friend, is spotting a TREND.

So once you find and confirm an up or down trend, things become easier for you. I am going to tell you a very simple and basic point, which is very vital and important in spotting the next trend you may wanna spot in a chart.

A trend is confirmed since no correction bigger than 38% of the previous move is seen. Whether a down or up trend, if a next move in the opposite direction measures bigger than 38% of the previous wave, you should doubt a trend has formed in that direction.


this is a sample, for an uptrend. as you see, corrections are smaller than 38%


and this is a sample, which shows a strong wave, follows by a strong opposite direction wave, which questions the previous rise was beginning of an uptrend.

I hope this small issue helps you better in future analyzing the charts :)


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