As the market moves, it will only move in one of three directions: up,
down, or sideways. When it moves in any direction, it waves. Those waves
become the emotional enemy of most traders. For some traders, it can take
years to trust those waves and ride them to their end target.
SPOTTING AN UPTREND
If the market is going to move up, or trend up, on any time frame, it will
wave up, creating higher highs, then wave back down, creating higher lows.
I have never seen it go directly to the moon like an Apollo rocket. If it were
to go to the moon, it would wave as it went, creating higher highs and
higher lows. At some point, the trend will end, but until it ends, most
successful traders try to take advantage of the move and take the ride up
until it bends or ends. Believe it or not, most traders make all their money
in trends and lose it all again in consolidation.
As the market trends in any direction, it moves at different speeds, just
like a car. Most trends travel at a 45-degree angle as they move, akin to a
car driving at normal speed. The trend line that is used for that 45-degree
movement is called the outer trend. When a trend moves at a slower pace, a
long-term trend line is created. Every now and then, the trend gets on a
freeway at highway speed, ascending at a greater angle than 45-degrees,
creating what is called an aggressive trend, or the inner trend line. Up and
96 THE 10 ESSENTIALS OF FOREX TRADING
Drawing Uptrend Lines
FIGURE 6-4
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