← Reading the Chart · lesson 5 of 10
By the end of this one you'll know how to tell an uptrend from a downtrend using nothing but your eyes and the dips and peaks on the screen.
A trend is just the direction the zigzags are leaning. Price never moves in a straight line, it climbs and dips like a horse taking the switchback trail up a hill. On the way up, every dip in the trail still sits higher than the dip before it, and every rise tops the rise before it. Chart folks call that higher highs and higher lows, and that pattern is an uptrend. Flip it around, each climb weaker and each drop deeper, lower highs and lower lows, and now the horse is working its way down the hill, a downtrend. Sometimes the trail just runs flat along the ridge, sideways, no trend at all. You don't need any tool for this, just look at where the dips and peaks land compared to the ones before them.
Same lesson, told by a hundred dollar bill. Tap to walk it one step at a time.
In this example, a coin's dips land at $100, then $105, then $110, and its peaks hit $115, then $120.
Higher lows and higher highs, that's the stair pattern of an uptrend, and $100 worth held from the first dip is worth about $110 by the third dip.
Now flip it: dips at $100, then $95, then $90 make a downtrend, and that same $100 is worth about $90.
Spotting the pattern is real, but the pattern promising to continue is not.
It's paycheck Friday and the bills are sorted into piles on the kitchen table. For four paydays you've put $10 into the same coin, and tonight you notice something: every dip on the chart has landed a little higher than the one before it.
Pick your move. Then peek at the other roads if you're curious.
A trend is just where the dips and peaks have been landing, and spotting one is real while trusting it to continue is a different thing entirely.