the hAnDbook of teChnICAL AnALySISIn Dow Theory, an uptrend is defined using peak and trough analysis. An
uptrend is represented by a series of successively higher highs (peaks) and lows
(troughs), while a downtrend is represented by a series of successively lower highs
and lows. This is the most popular definition of a trend. See Figures 5.1 and 5.2.
Definition versus absolute Measure of a trend
The problem with definitions is that if price action does not unfold in a manner
required under its definition, no trend would be recognized or even acknowledged.
In addition, if price action was inordinately erratic or chaotic, the identification
of a trend using peak and trough analysis may prove extremely challenging, if not
impossible in some situations. All definitions impose limitations, which may lead to
situations where an actual trend may not be acknowledged or recognized.
figure 5.1 Peak and Trough Representation of an Uptrend.
figure 5.2 Peak and Trough Representation of a Downtrend.
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LHA downtrend
unfoldingLLL
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