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Powerful Techniques to Determine Trend Strength: Analysing Past Levels of Support/Resistance Part 3 Video

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How strong is the trend? http://www.financial-spread-betting.com/course/what-is-a-trend.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Anything else we can check to analyse the strength of a trend. Another thing we can do is to check how a market respond to previous levels. If we have a key resistance level in the past and we have the market pushing up, how does price respond to that level? This is going to give us a little insight into the strength of a trend. Fine, but what is the response after we test it. Similarly with resistance levels. Look at the characteristics of how volume matches up with what's going in the trend. Look at the time intervals... And then look at pullbacks because it gives you an insight into the other guys in the markets. So things to look at in summary, time and direction of a trend, size of the pullback, aggressiveness in terms of strength of a trend.

Part 1: https://www.youtube.com/watch?v=XbwNTmj4b3Q
Part 2: https://www.youtube.com/watch?v=WAqg-yUui9U
Part 3: https://www.youtube.com/watch?v=eBBJKbsO8Po

Trends – Support and Resistance

So far we’ve looked at trading a trend, and talked about how we can take different views on the strength of the trend. We are looking for a strong trend so that it may reasonably be expected to continue, and we can trade on it.

Volume of trading is one clue on the strength of the trend. Obviously if lots of people are buying in a clearly rising market, there’s a great deal of momentum and reason to think that the trend will continue. We also looked at pullbacks, to see what they can tell us about the strength of the trend. In this case we were looking for the size of a pullback and also how long it lasted. With a small pullback before the trend resumes and a quick return to the uptrend, we can infer that the trend is strong.

Another way to judge the strength of the trend is to look at previous support and resistance levels. We know from our studies that a stock will tend to return to the same support and resistance levels that it did in the past. These levels mark turning points, where the trend may reverse, or at least places where the trend might be punctuated by a retracement or pullback.

So when you are following a trend, it is useful to find out where previous support and resistance levels were. In this case we are looking particularly for ones which were returned to several times, as they are regarded as more secure. If we are following a trend and it breezes straight through the support or resistance without flinching, that is a sign that the trend has a great deal of strength, and the buyers into the market are not concerned or slowing.

We are not so concerned about what a price does as it approaches a supported resistance level, but rather what it is going to do after it reaches it. Perhaps it goes straight through, but this would be an extremely strong trend. If the price stops at the resistance level, pulls back a little, but sets off again quickly, that again is a very strong sign that the trend will continue.

In summary, we can look at the performance of the trend and judge its strength by looking at volume of trading, length of time of any pullbacks, and the size of the pullbacks. These will give us clues whether the trend is likely to continue or whether it is starting to weaken.

We may not even be concerned if the trend is weakening, just as long as it is not reversing. In an uptrend, buyers dominate. If they lose their dominance, provided the sellers do not strengthen, the worst that can happen is that the price is not pushed any higher, the buyers are satisfied that they have bought enough. We see this in the chart by the price levelling out, and perhaps range trading for a while.

Trend trading is one of the soundest methods of trading for a profit, and should be one of your major focuses.

Related Videos:

How to Trade Trends and Build a Trend-Based Trading Strategy! 👊
https://www.youtube.com/watch?v=tMfCMTY5TN4
Guide to Trading Pullbacks within a Trend Part 1 👍
https://www.youtube.com/watch?v=aRP6jE6ydgk
How to Profit from Trading Pullbacks within a Trend Part 2 👍
https://www.youtube.com/watch?v=wGJH4pUbaHw
PullBack Day Trading Strategies Part 3 👍
https://www.youtube.com/watch?v=zR9CzWOzSQU

How Can You Determine the Strength of a Trend? Part 1
https://www.youtube.com/watch?v=XbwNTmj4b3Q
How Strong is the Trend? Pullbacks: The Trend Strength Indicator Part 2
https://www.youtube.com/watch?v=WAqg-yUui9U
Powerful Techniques to Determine Trend Strength: Analysing Past Levels of Support/Resistance Part 3
https://www.youtube.com/watch?v=eBBJKbsO8Po

Tactics for Buying Pullbacks In Strong Trends 👊
https://www.youtube.com/watch?v=QnSAfyZtkj4
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