Put many candles together and a trend appears. Learn to tell a rising trend, a falling trend and a sideways move apart, and how to respond to each one in the game.
Swing highs and swing lows
Reading a trend starts with swing highs and swing lows. A swing high is a peak that sticks out above the candles around it; a swing low is a dip below the candles around it. In this lesson’s charts, a down arrow (↓) above a candle marks a swing high and an up arrow (↑) below a candle marks a swing low.
Drag the chart sideways with a finger or the mouse to move it, and pinch with two fingers to zoom in. With a keyboard, click the chart, then use ←/→ to move and +/− to zoom.
Uptrend
Both the highs and the lows keep getting higher. Each new high beats the previous one, and pullbacks stop before the previous low.
Charts by TradingView Lightweight Charts™
60 candles in a rise. Swing highs (↓) and swing lows (↑) get higher step by step. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
Downtrend
Both the highs and the lows keep getting lower. Rebounds fail to pass the previous high, and each new low is below the previous one.
Charts by TradingView Lightweight Charts™
60 candles in a fall. Swing highs (↓) and swing lows (↑) get lower step by step. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
Sideways move
The highs and lows stay within a fixed range. Capped on both sides, the price looks boxed in, so this is also called a range or a box. The ceiling is where rises keep stalling; the floor is where falls keep stopping.
Charts by TradingView Lightweight Charts™
60 candles moving sideways inside a box. The two dotted lines are the ceiling and the floor of the box. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
Breakout
When a boxed-in price pushes through the ceiling, it is called a breakout. It means the price got past a level that held it back for a long time, so it is commonly read as the start of a new rise. A break below the floor is read the other way, as the start of a new fall.
Charts by TradingView Lightweight Charts™
A price moving back and forth inside a box pushes up through the ceiling. The two dotted lines are the ceiling and the floor, and the candle marked with a yellow vertical line is the breakout candle. Keyboard: ←/→ to move, +/− to zoom, 0 to see the whole chart.
Reading the trend in the game
When a match starts, the first 60 candles are already on the chart and you get 5 seconds to look at them. Decide from those 60 candles which of the three moves you are in, and you will know what to wait for as the next candles come in.
| Move | A common response |
|---|---|
| Uptrend | Buy and hold until the trend turns. A low that falls below the previous low is taken as a sign that it has turned. |
| Downtrend | There is no short selling in the game, so you cannot make money while prices fall. Sit it out and wait for a rebound or a change of trend. |
| Sideways | Buy near the floor of the box and sell near the ceiling. Once a breakout happens the box is over, so do not keep playing it the same way. |
Watch out for
- False breakouts: the price often pokes above the ceiling and then drops back into the box. Check that it holds above the ceiling afterwards.
- Short stretches: a few candles are not enough to call a trend. You need two or three highs and lows in a row before you can call it a move.
- Trade count: a match allows up to 10 trades (a buy counts as one and a sell counts as one). Trading often in a sideways move uses them up fast.
Instead of picking out every high and low, there is a tool that sums up the trend in one line: the moving average, in the next lesson.