Lesson 4 | Trends Push Step by Step; Ranges Squeeze

This lesson has a video at the top of the page.

In one sentence

A trend always has a push; a range always has a squeeze. Bounces that keep falling short of the line are a push; pressure above and support below is a squeeze.

The push

In a downtrend, every bounce falls short of the previous line.

• It can't reach the line, so price is pushed lower.
• It bounces again, falls short again, and is pushed lower again.

The push continues until one day price breaks that line to the upside; only then is the fall over. In an uptrend it is the other way round: every pullback falls short of the line below, and price is pushed up one level at a time.

An analogy

A push is like walking down stairs. Each step is lower than the last. To know whether you are still going down, just check whether this step is lower than the previous one. The day a step is not lower, the staircase has ended.

On the gold chart

Five highs, each lower than the last, and the lows kept falling too. That is a step-by-step push: every step lower than the one before.

So when does this fall end? Watch the nearest line, 4,097.

• A close above it breaks the downward push.
• If price can't close above it, the push is still on.

The squeeze

Right now gold has 4,097 pressing from above and the 3,955 floor holding from below. It can't go up and it can't go down: that is a squeeze.

A squeeze produces a range. Only consider trading near the lines at either end; don't chase in the middle.

The most common mistakes

1. Chasing in the middle of a squeeze. The middle is far from both ends, so the stop has to be wide and the risk-reward is poor.
2. Calling the push over after one big candle. Check whether price closed above the line. Spiking above intraday and falling back doesn't count.
3. Learning ranges first. Ranges are always harder than trends. Start with the push.

Explain it in your own words

1. Use the staircase analogy to explain a step-by-step push.
2. When is gold's downward push broken?
3. Why not chase in the middle of a squeeze?

Practice

On your chart, connect the highs of the latest trend and check whether each is lower than the last (in an uptrend, check whether each low is higher). Find the line that would break the push if price closed beyond it, and mark it.

Four ideas done

The market moves in order, every move has a cause, levels hold each other in check, trends push step by step. The next lesson covers how to study this course, then Module 2 picks up the first tool: 1.382.

Previous: Lesson 3 | Every Move Has a Cause　Next: Lesson 5 | How to Study This Course

This course teaches a method using past price action as examples. It does not forecast prices, recommend any broker or give investment advice.