When the trend changes (“objective change in trend”)
This sequence of charts shows a good example of how I define a trend change. Although the market and timeframe do not matter. Concept
extends to any timeframes. It so happens that I use minute charts.
Initially, we see the price in an uptrend, it is approaching the zone of resistance between 1.5796 and 1.5802. The momentum is clearly slowing as the price
makes three unsuccessful attempts to pass the resistance area (once having formed a resistance test, twice forming a false breakdown
resistance). As a result, the price breaks the local minimum between 2 and 3 attempts to break through the resistance.
I call such a breakdown of the local minimum an "objective" change in the trend.
"Objective" change points to the fact that there is no definite direction in the market. The price is trading below the local minimum - this is without a doubt.
For me, the definition of an “objective” change in trend does not really mean a change in trend.
I determine the trend change in the presence of two components:
1. Objective change in trend, and
2. Accepting prices in a new area (I often call this a subjective change in trend).
Accepting a price means seeing evidence that the price continues to bargain beyond the point at which an objective change occurred
trend. In our case, this consolidation is below. When the price refuses to gain a foothold below the point of objective change in the trend, this may mean a failure to change the trend (and this is usually a good trading opportunity in the direction of the initial trend).
This example is interesting. As shown, the price entered stagnant immediately after the point of an objective trend change, bulls and bears found some balance of power.
From this point, if the price goes up, this will mean a rejection of an objective change in the trend, and a fourth attempt to break through the resistance zone.
The uptrend remains in force. Breaking down will mean accepting the price, confirming our “subjective” trend change. Then consider the downtrend.