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Trading Change

· 5 min read
Femi Adigun
Femi Adigun
Senior Software Engineer & Coach

ANALYZING THIS CHART - TREND CHANGE CONFIRMATION

Looking at your current chart, this is NOT forming higher highs yet. Let me explain what I'm seeing:

CURRENT STRUCTURE:​

What I see:

  • Major high: 670.74 (top left, early morning)
  • Price collapsed from 670.74 → 667.00 area
  • Now attempting bounces but each bounce is LOWER than 670.74
  • Recent highs: ~669.70, ~669.40, ~668.60 (declining)
  • This is LOWER HIGHS = still bearish structure

Red moving averages are pointing DOWN and acting as resistance. Price is below them. This confirms downtrend is still intact.

WHAT WOULD CONFIRM TREND CHANGE TO BULLISH:​

You need THREE things to happen in order:

1. BREAK the downtrend structure (First sign)​

Price must break ABOVE the most recent significant high.

Looking at your chart:

  • Recent resistance: 669.70-670.00 zone
  • Price needs to break ABOVE 670.00 and HOLD for at least 15-30 minutes
  • Just touching it isn't enough - needs to close multiple candles above it

2. MAKE a higher low (Confirmation)​

After breaking above 670.00, price will pull back. This pullback must find support HIGHER than the previous low.

Example sequence:

  • Current low: 667.00
  • Breaks above 670.00
  • Pulls back to 668.00 (this is HIGHER than 667.00) ✓
  • This creates a higher low

3. BREAK to a NEW higher high (Trend change complete)​

From that higher low (668.00), price must rally and break the previous high.

Example:

  • Previous high: 670.00
  • Must break above 670.20+ on the next rally
  • This confirms: Higher low + Higher high = UPTREND

VISUAL CHECKLIST FOR TREND CHANGE:​

DOWNTREND → UPTREND requires this sequence:

1. Break resistance ✓ (break above 670.00)
2. Pull back ✓ (must hold above last low)
3. Make new high ✓ (break above 670.20+)

Only when ALL THREE happen = Valid trend change

CURRENT STATUS:​

Right now you're seeing:

  • Bounces within the downtrend (lower highs)
  • Red MAs still pointing down
  • Price still below major resistance
  • This is NOT a trend change yet
  • These are bear market bounces / dead cat bounces

This is still a downtrend until proven otherwise.

WHEN TO STOP CALLING IT A TRAP:​

A bounce becomes a valid reversal (not a trap) when:

Minimum requirements:​

  1. Breaks above the downtrend line (red curved resistance)
  2. Closes above previous significant high (670.00+)
  3. Holds above it for 15-30 minutes (multiple green candles)
  4. Makes a higher low on pullback
  5. Volume confirms (strong volume on the breakout)

Strong confirmation:​

  1. Price reclaims moving averages (gets back above red MAs)
  2. Moving averages start curling up (red turns to green)
  3. Multiple higher highs and higher lows form
  4. Time factor - sustains for 30+ minutes

SPECIFIC LEVELS FOR YOUR CHART:​

For bulls to take control, watch these in order:

  1. First resistance: 669.70-670.00

    • Must break AND hold above this
    • Just touching and rejecting = still bearish

  2. Second resistance: 670.30-670.50

    • Breaking this shows real strength
    • This is where you'd see higher high forming

  3. Key moving averages

    • Must reclaim the red curved lines
    • They're around 669-670 area
    • Getting above them = major shift

For bears to maintain control:

  • Keep price below 669.50
  • Reject at 670.00 resistance
  • Break below 667.50 again

WHAT YOU'RE SEEING NOW:​

These bounces from 667.00 → 668.80 → 669.40 are:

  • Relief rallies in a downtrend
  • Lower highs (not reaching 670.74)
  • Dead cat bounces
  • Not trend changes (yet)

This is why they keep failing - the overall structure is still bearish.

HOW TO TRADE THIS:​

If you believe downtrend continues:​

Short the bounces to resistance (669.50-670.00 area)

If you want to catch the reversal:​

DON'T try to guess the bottom. Wait for:

  1. Break above 670.20
  2. Pullback to 668.50-669.00
  3. THEN buy calls
  4. Stop below the higher low

Trying to buy calls now at 667-668 = catching falling knives

THE TRAP vs. REAL REVERSAL:​

TRAP characteristics (what you're seeing now):

  • Bounces that fail at resistance
  • Lower highs still forming
  • Red MAs providing resistance
  • Each bounce weaker than the last
  • Can't sustain gains

REAL REVERSAL characteristics (what to wait for):

  • Breaks through resistance with volume
  • Holds above breakout level
  • Makes higher lows on pullbacks
  • Breaks to new higher highs
  • MAs turn from red to green
  • Sustains for 30+ minutes

HONEST ASSESSMENT:​

Based on this chart, you're still in a downtrend. Those green candles you're seeing are bounces, not reversals. The trend hasn't changed yet.

Don't confuse a bounce with a trend change.

Wait for the structure I described above before calling it bullish. Until then, these are trading opportunities to SHORT at resistance, not buy.

Current bias: Still bearish until 670.20+ breaks and holds.