Direction Of The Market

Price goes from point to point. One of the objectives of a trader is to identify places where price reverse and indications of a price reversal.

In Basic Price Action you have these component parts:

1) Support/Resistance

2) Direction

Up and Down in the markets are relative.

Direction Definition:

The symbolization of price movement from one point to another.

Each Arrow Symbolizes a price movement. Each Grey Spot Symbolizes a place where that price movement stopped and another one began.

On an actual chart it would look like this

USDCHF Weekl;y

Now this is not 100% accurate in terms of identifying all the movements, I have focused more on the significant movements but this is just a basic demonstration of the theory.

What as a trader we are trying to do is capitalize on these movements.

The purpose of a strategy is to try predict movements.

A traders objective is the be more right than he is wrong (Which translates to maximizing wins and minimizing losses)

Hopefully this clears up basic market structure and direction.