Detailed Summary

An uptrend is characterized by a continuous sequence of higher tops and higher bottoms. The uptrend line is a technical analysis tool created by connecting at least two troughs (bottoms) within this rising pattern. This line serves as a dynamic support level, while the higher tops function as resistance. Generally, when the price hits the uptrend line, it is expected to bounce higher; however, breaching this line suggests a potential change in the prevailing market structure.

Key Takeaways

• An uptrend is defined by creating successive higher tops and higher bottoms.
• The pattern of higher tops and bottoms must continue for the uptrend to remain intact.
• The uptrend line connects two or more bottoms (troughs) within the rising pattern.
• A minimum of two bottoms are required to establish the uptrend line.
• The reliability of the uptrend line increases with the number of bottoms used for its confirmation.
• The uptrend line acts as a dynamic support level for the price.
• The higher tops within the pattern act as resistance levels.
• The standard expectation is that the price will bounce higher when it reaches the uptrend line.
• A breach of the uptrend line signals a potential shift in market structure.