Trends, support and resistance, breakouts and fakeouts

What it means: Price makes higher highs (HH) and higher lows (HL). Each dip stops above the last one.

How traders use it: Many traders only look for buys in an uptrend, often after a dip to a higher low.

What it means: Price makes lower highs (LH) and lower lows (LL). Each bounce stops below the last one.

How traders use it: Many traders only look for sells in a downtrend, often after a bounce to a lower high.

What it means: Support is a price where falling prices keep stopping. Resistance is where rising prices keep stopping. The more times a level is tested, the more traders watch it.

How traders use it: Traders look for bullish signals near support and bearish signals near resistance.

What it means: Price finally pushes through a level it couldn't break before. Old resistance often becomes new support. (Shown upward here; breakouts happen downward too.)

How traders use it: Some traders buy the break; others wait for a retest of the old level to avoid fakeouts.

What it means: Price pokes above a level, then quickly falls back below it. Traders who bought the break get trapped. (Fakeouts happen below support too.)

How traders use it: This is why many traders wait for a candle to close beyond the level, or for a retest, before acting.