In the Technical and Chart Analysis, the most important step, which is sometime referred as your best friend, is spotting a TREND.
So once you find and confirm an up or down trend, things become easier for you. I am going to tell you a very simple and basic point, which is very vital and important in spotting the next trend you may wanna spot in a chart.
A trend is confirmed since no correction bigger than 38% of the previous move is seen. Whether a down or up trend, if a next move in the opposite direction measures bigger than 38% of the previous wave, you should doubt a trend has formed in that direction.
this is a sample, for an uptrend. as you see, corrections are smaller than 38%
and this is a sample, which shows a strong wave, follows by a strong opposite direction wave, which questions the previous rise was beginning of an uptrend.
I hope this small issue helps you better in future analyzing the charts :)
I also have posted this on my Publish account.
