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Trend: higher highs and higher lows

Foundations · Beginner · 7 min read
You will learn to
  • Identify swing highs and lows
  • Define up-, down- and sideways trends objectively
  • Know when a trend is broken

Swings

Prices move in waves. A swing high is a peak with lower highs on both sides; a swing low is a trough with higher lows on both sides. NexusCore's tools use 5 candles on each side to confirm one — which also means a swing is only confirmed 5 candles after it happens.

Three states

HHHLHHHLHHLHLLLHLL
  • Uptrend: each swing high is higher than the last (HH) and each swing low too (HL).
  • Downtrend: lower highs (LH) and lower lows (LL).
  • Range: swings overlap without progress.

When is a trend broken?

Not when a red candle appears, not when RSI is "overbought". An uptrend's structure breaks when price closes below the last higher low — the low that buyers had to defend. Until then, every decline is a pullback. In a downtrend, the break is a close above the last lower high.

That last higher low is also where a stop belongs for a trend-following long: if it breaks, the reason for the trade is gone.

Measuring trend with averages

Moving averages summarise the same thing smoothly: price above a rising 20 and 50 EMA is an uptrend. NexusCore's trend read uses one rule for every timeframe — the 20 vs 50 EMA, their slope, and ADX for strength — so "up" means the same on 15m and 1D.

Common mistakes

  • Calling tops: "it has gone up too much" is not a structure break.
  • Ignoring which timeframe a trend is on: a 15m downtrend can sit inside a 1D uptrend.
  • Counting every wiggle as a swing — use the same rule each time.
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Check yourself

1. In an uptrend, what breaks the structure?
  1. Any red candle
  2. A close below the last higher low ✓
  3. RSI above 70
Red candles and overbought readings happen inside healthy trends; losing the last higher low is a change of structure.
2. Swing highs 100, 108, 104 and swing lows 90, 97, 92. What is this?
  1. A strong uptrend
  2. The uptrend has stalled: a lower high and a lower low ✓
  3. A downtrend for months
104 < 108 and 92 < 97 — the sequence of higher highs and lows has stopped.
3. Why is a swing point only confirmed a few candles later?
  1. Exchange delay
  2. You need candles after it to know it was a peak or trough ✓
  3. It is not
A high is only a swing high once lower highs follow it.

Terms in this lesson

Higher high / higher low
The building blocks of an uptrend.
Swing high / low
A peak (trough) with lower highs (higher lows) on both sides; NexusCore uses 5 candles each side.
Practise it on real charts. In the app, this lesson comes with real examples (reveal what happened next), a graded drill and the track test. Open the Academy in NexusCore — free →