There are three important market phases: Trending, Trading and Sideways Markets.
• You need to identify and distinguish between these phases.
• We will have a somewhat different approach in our Analysis and Planning depending of the phase.
No market or instrument will go in just one direction for ever, although a Trending phase on a stock/share may sometimes continue for months and even years.
1. Trending Phase
In an uptrend we get Higher Highs and Higher Lows, in a Down Trend Lower Lows and Lower Highs.
For an investor or long term trader this is the most important phase.
An investor will in an uptrend ad to his position on pull backs or corrections. Most often long term investors will have a Buy and Hold view.