Now that we understand the concept of what the trend and the uptrend are, let’s take it one step further.
We will start by examining the downtrend in more detail.
Remember that downtrend is defined as the direction of successive lower tops and lower bottoms.
It looks like a zigzag.
Do you see the picture?
Good.

Now the question is, what is the minimum number of tops and bottoms needed to define a downtrend?
Well, the answer comes from Charles Dow himself.
Two successively lower tops and two successively lower bottoms.
Remember that an object in motion will continue to move in the same direction until there is an opposing force acting upon it.

This also reminds me of Newton’s First Law of Motion.
Similarly, a downtrend will continue to move lower and lower until it reverses.
Is it guaranteed 100% that an uptrend will continue to move lower and lower?
No.
But it’s more likely to move lower than to reverse.
I hope it’s clear.

So, what is the more sensible thing to do during a downtrend?
If you said “sell”, then I am with you.
Since the downtrend will most likely continue to move lower, a buy would not be the wisest thing to do unless you are a contrarian. But that is a different concept.
Now that we have cleared that up, let’s examine the downtrend.

I am sure that you will agree with me that a downtrend is defined by successively lower tops and lower bottoms.
How many?
Two lower tops and lower bottoms.
Remember the key word here: Successively.
Successively lower tops and successively lower bottoms.
And, of course, a downtrend is more likely to continue to move lower and lower until it reverses.
It’s like the water in a river flowing downstream.
Isn’t it more likely to keep moving towards that specific direction?
Perfect!

Now, we can place a sell trade to take advantage of this!