How to determine the market direction? (Quickly and clearly)
1) Identify the general trend (Trend)
Use any chart on a 4-hour or daily timeframe and ask yourself:
Are the highs rising and the lows rising? ➝ Uptrend
Are the highs falling and the lows falling? ➝ Downtrend
Are the highs and lows close together with no rise or fall? ➝ Sideways trend
> The golden rule: the trend is your friend… do not trade against the trend.
2) Use simple moving averages (SMA 50 and SMA 200)
If SMA50 is above SMA200 ➝ the market is rising
If SMA50 is below SMA200 ➝ the market is falling
If they are close and cross each other often ➝ the market is volatile (best to avoid entering)
3) Monitor momentum (Momentum)
A simple tool: RSI
RSI above 50 ➝ bullish momentum
RSI below 50 ➝ bearish momentum
RSI between 45–55 ➝ weak or sideways trend
4) Monitor trading volume (Volume)
If the price is rising and the trading volume is rising ➝ strong rise
If the price is rising and the trading volume is falling ➝ weak rise (beware)
If the price is falling and the trading volume is strong ➝ confirmed fall
5) Confirm the trend across multiple timeframes
Open 3 timeframes:
Daily ➝ gives you the general trend
4 hours ➝ gives you the medium trend
1 hour ➝ entry and exit
If all three are in the same direction ➝ safe entry
If each one gives a different direction ➝ do not trade
📌 Quick summary
Higher highs + higher lows = rise
Lower highs + lower lows = fall
Volatility = be careful… do not enter
Confirmation via SMA50/SMA200 + RSI + Volume
