Identifying the trend is a trader’s best friend

Many of you have probably heard the statement that you need to trade with the trend. In almost every trading book, this idea is mentioned on the very first pages.
This is indeed true, which is why in our recent posts we have been placing a strong emphasis on trendlines.

A breakout and consolidation below these trendlines will finally break the bullish trend.
Similarly, the opposite is true: a breakout and consolidation above these trend lines will finally break the bearish trend.

🔍 How to identify a trend?

Everything is quite simple.
An uptrend line is drawn through two or more local lows.
A downtrend line is built through two or more local highs.

First, you need to determine at least the mid-term trend on the weekly timeframe.
After that, you can move to a lower timeframe, such as the daily.
There you can build a local trend channel to understand the short-term trend.

But the lower the timeframe, the lower the effectiveness of trendlines.
That’s why, on the daily timeframe, trend channels almost always include channel medians, which are built using abnormal candle wicks.

❗️ As for hourly timeframes, we generally do not recommend using them for trading.
There is too much unnecessary noise on lower timeframes, which will negatively affect your trading results.

For example, the picture above shows a chart SOLUSDT with a breakdown of an upward trend downward. As you can see, after the breakout the price fell by -61% 📉

https://www.tradingview.com/x/glLHGblh/
The next picture SUIUSDT shows a similar situation, only in this case the price fell by -76%.


But in picture 3 BNBUSDT the opposite situation is a breakdown of the downward trend, which led to an increase in the asset by +200% 📈

Yes, there are quite a few coins on the market right now that have broken their downtrend lines.

But the number of coins has grown so much that liquidity simply can’t be distributed across all of them.

Especially considering that in the current environment, the main capital inflow comes from institutional investors, not retail.

So don’t fall into euphoria and don’t buy everything.
Right now is a time when growth is concentrated in a small number of coins.

Good luck!

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