Yes, it's a basic principle of TA since Charles Dow that markets trend (but see below) . But I'm not sure that answers the question that was posted by the Member (@AverageJoe), which was very precisely posed, however contrary to prevailing orthodoxy.
The question was how - exactly - this knowledge is useful. This is an unorthodox position to present, but forces one to think outside the proverbial box, to have an open mind to the conventional wisdom (which is rarely wise).
But as usual, I am sure he can and will speak for himself.
They do (trend), until they don't (gold has been in a trading range and not trending for at least a couple months now) - and then break prior horizontal support / resistance, key point of liquidity and changed expectations.
It's these significant reversals north or south we look for.
Of course there are trends, and there are trends within trends, of multiple durations (when the instrument is not trending but in a trading range).
One can say gold has been trending down since early May, but that's only useful for very short term traders ...which is fine for a lot of people......most on HC seem to be Day Traders and Short Term Traders,...just look at the immense popularity of those Forums, pre-market open, and special Lounges on weekends.
In my own chart 4, 5 hours ago I had no trend lines (or indicators), but suggested where we might test, or break down. At this early hour, it appears we are breaking below previously accepted support levels ("key level being tested again...critical, IMO").
A breakout (or breakdown) will best be indicated by a decisive reversal of previously tested horizontal resistance (or support). In fact this is one the claims to fame of candles as a method of charting, detection of reversals - be the claim valid or otherwise. Steve Nison said it to my face, (and that of other students 15 years ago) introducing a 4 Part Class.
I realize many will - and do - also dispute the validity and (statistical) reliability of candles as a method of price analysis and reversal detection, and go to websites and quote the %ge likelihood of a candle signal being incorrect.
There are many ways to detect price movement, most flawed, else we'd all be rich. Use whatever works for you.
The question was very precise - albeit unorthodox - and intimates there are other ways, which the member as presented here more than once.
It's not been answered. I suggest it won't be answered, because it's too hard, too contrary to the hoary old chestnuts of TA, especially when it comes to these instruments which are subject to the manipulation (*not* illegal) of market makers (large banks), whom I can guarantee you are not looking at trend lines or Slow (or Fast) Stochastics on their 6 terminals with the most sophisticated software known outside of NASA (actually, they are often called quants, so many ARE - in fact - from NASA: the pay is better) when they eat you up alive.
I respect Joe and his approach, but am not being paid for this endorsement![]()
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