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Trend, range & the market's phases

5 min read

Markets are only ever doing one of two things: trending (going somewhere) or ranging (going nowhere). Knowing which you're in decides how you should trade.

Uptrend — a staircase of higher highs and higher lows. You want to buy the pullbacks, not short the strength.

Downtrend — lower highs and lower lows. You want to sell the rallies.

Range — price bouncing between a floor and a ceiling, no higher highs or lower lows. You fade the edges (buy support, sell resistance) — or you wait for the breakout.

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An uptrend: a staircase of higher highs and higher lows.

The phase cycle. Zoom out and markets breathe in four phases: quiet accumulation (smart money building a position) → markup (the trend up) → distribution (smart money selling to the crowd) → markdown (the trend down). Wyckoff traders read this cycle directly; ICT traders call the intraday version "Power of Three." Same idea: someone accumulates quietly, then the obvious move happens.

The most expensive mistake is trading a range like a trend, or a trend like a range. Name the phase first.

Now grade a setup with it.

Reading it is the easy part. Tick this alongside your other confluences before your next entry, log what happened, and find out whether it actually pays for you. Free while TradeFern is in beta.

Grade a setup