GBPCAD TREND ANALYSISIS

Bearish break of the channel by GBPCAD and the question for traders is :are we now starting to trend downwards or is just a pullback?

SIGNALS AND IDENTIFICATION OF TRENDS USING THE DOW THEORY EXPLANATION

One of the most difficult aspects of applying Dow Theory is correctly identifying trend reversals. Remember that a Dow Theory trader trades with the market's overall direction, so it is critical that they recognize the points at which this direction shifts.

Peak-and-trough analysis is a key technique in Dow Theory for identifying trend reversals. A peak is the highest price of a market movement in a period, whereas a trough is the lowest price of a market movement in a period. It should be noted that Dow Theory assumes that the market does not move in a straight line, but rather from highs (peaks) to lows (troughs), with the overall market movement trending in one direction.

Note that In Dow Theory, an upward trend is defined as a series of successively higher peaks and troughs. A downward trend is characterized by a series of lower peaks and troughs.