DEFINITION OF TREND
An uptrend consists of higher highs and higher lows. In another words, for an uptrend to continue, each successive rally high (resitance level) must be higher than the previous rally high and each successive rally low (support level) must also be higher than the previous previous rally low.
A downtrend consists of lower lows and lower highs. In another words, for a downtrend to continue, each successive rally low
(support level) must be lower than the previous rally low and each
successive
rally high (resistance level) must also be lower than the previous rally
high.
Every time market tests support and resistance level, the trend is in crucial phase. In an uptrend when market tests the resistance level, it must penetrate and exceed beyond the previous resistance level in order to maintain the uptrend.
In the case of downtrend, when market tests the support level, it must penetrate beyond the previous support level in order to maintain the downtrend. Failure to do so potentially gives rise to trend reversal and also the role reversal of support level and resistance level.
