Of significance to many traders, particularly swing traders or those who focus heavily on price action analysis, is whether a market has a pattern of falling highs or rising highs -- this can indicate the trend and its strength.
Observe the highlighted regions in the chart above. The first two, in orange, show a pattern of lower highs. Bears may have interpreted this as a sign of bearishness -- and thus justification for closing out long positions and/or initiating short positions -- though the third highlighted region, in yellow, does not fit the pattern; it shows a high that is above the second highlighted region's high. This gives the bulls some justification in thinking that the current upwards trend is not over just yet.
Observe the highlighted regions in the chart above. The first two, in orange, show a pattern of lower highs. Bears may have interpreted this as a sign of bearishness -- and thus justification for closing out long positions and/or initiating short positions -- though the third highlighted region, in yellow, does not fit the pattern; it shows a high that is above the second highlighted region's high. This gives the bulls some justification in thinking that the current upwards trend is not over just yet.
S&P 500 Breaks Out of Its Pattern of Lower Highs -- What's It Mean?
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