Bearish break of the channel by GBPCAD and the question for traders is :are we now starting to trend downwards or is just a pullback?
SIGNALS AND IDENTIFICATION OF TRENDS USING THE DOW THEORY EXPLANATION
One of the most difficult aspects of applying Dow Theory is correctly identifying trend reversals. Remember that a Dow Theory trader trades with the market's overall direction, so it is critical that they recognize the points at which this direction shifts.
Peak-and-trough analysis is a key technique in Dow Theory for identifying trend reversals. A peak is the highest price of a market movement in a period, whereas a trough is the lowest price of a market movement in a period. It should be noted that Dow Theory assumes that the market does not move in a straight line, but rather from highs (peaks) to lows (troughs), with the overall market movement trending in one direction.
Note that In Dow Theory, an upward trend is defined as a series of successively higher peaks and troughs. A downward trend is characterized by a series of lower peaks and troughs.
SIGNALS AND IDENTIFICATION OF TRENDS USING THE DOW THEORY EXPLANATION
One of the most difficult aspects of applying Dow Theory is correctly identifying trend reversals. Remember that a Dow Theory trader trades with the market's overall direction, so it is critical that they recognize the points at which this direction shifts.
Peak-and-trough analysis is a key technique in Dow Theory for identifying trend reversals. A peak is the highest price of a market movement in a period, whereas a trough is the lowest price of a market movement in a period. It should be noted that Dow Theory assumes that the market does not move in a straight line, but rather from highs (peaks) to lows (troughs), with the overall market movement trending in one direction.
Note that In Dow Theory, an upward trend is defined as a series of successively higher peaks and troughs. A downward trend is characterized by a series of lower peaks and troughs.