Trend change patterns

Now that I’ve explored the possibility of a trend continuing indefinitely, I’ll now look at some of the patterns that can occur when trend changes occur. The first I’ll look at is uptrend change patterns.

Uptrend change patterns

I’ve already described the situation where an uptrend becomes overheated and corrects dramatically downward. This occurs frequently but is by no means the most frequent uptrend change pattern. Two more common ones are:

⇒ uptrend to sidetrend

⇒ uptrend to downtrend.

These are illustrated in figure 4.5.

Figure 4.5: uptrend change patterns

As marked in this diagram, when an uptrend reverses to a downtrend the point at the apex of the change (highest price) is known as the pivot point.