Most people learn to read by looking at pictures. Think of the books you grew up with. The pictures described the story you were reading. People learning to trade the market do the same thing, except the pictures are charts. Charts are developed by price changes over a specific time. The chart usually consists of bars that have a high, low, open, and close, over the specified time. Once the chart has several of these bars, we can then begin to see a trend.
If a bar has a higher high and a higher low than the previous bar, then there is an uptrend. If a bar has a lower high and a lower low than the previous bar, then there is a down trend. A lower high and a higher low is what is called an inside bar since it has not exceeded the high or low of the previous bar and has no trend. Finally, the outside bar has a higher high and a lower low, again, no real direction.
Every trader is trying to figure out the answer to a question, “should I be long, short, or out of the market?” Looking at the chart pattern, we should be able to determine the answer to this question, or at least eliminate one of the choices. So if charts are how you look at the market, look at the chart pattern and stay with the trend. Good luck trading.