How to identify a trend on a chart

Updated: 7 November 2026

In short: An uptrend means each new high and low is above the previous ones (HH and HL). A downtrend — below (LH and LL). The trend continues while price closes beyond the last high or low in its direction — that is a BOS.

When the trend is in doubt

The first break of structure against the trend with a candle close is a CHoCH. It signals that the previous scenario no longer holds. A wick poke without a close does not count as a break.

Range

If highs and lows are not being renewed and price moves inside a corridor, that is a range. Traders either trade from its edges or wait for a breakout.

Example: trend by swings

Price rose to 105, pulled back to 101, rose to 108, pulled back to 104, rose to 112. Each new high is above the last (105 → 108 → 112), and so is each low (101 → 104). That is an uptrend. Until price closes below 104 — the last low from which a new high was made — the trend is considered alive.

When the trend is broken

The first close against the trend beyond the key low (in an uptrend) is a CHoCH, the first sign of a change of character. It does not guarantee a reversal, but it is a reason to stop buying and wait. A break with the trend — a new high closing above the previous one — is called a BOS and confirms continuation.

Mistakes in reading the trend

Looking at different timeframes and concluding the trend is "both up and down" — on different timeframes that does happen, so choose a main one (say H4) and a working one (H1). Calling two candle impulses a trend. Declaring a reversal on one red candle. Fighting the trend: "it is already high, it must fall" is one of the most expensive arguments in trading.