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Knowing what makes prices move and how they move is one of the most important aspects of trading. When you go into a market to buy or sell you should always have an idea of what has gone on with the price, is it at a discount price or is it high compared to what it was recently? Having no idea what level price is at compared to the past is like being a time traveler and not knowing if you traveled to the future or past. Don't be like a time traveler with no idea what year it is.
Price moves due to dominance of either the buyers in the market over sellers (price goes up) or a dominance of sellers over buyers in the market (price goes down).
I always say to myself that "yesterday's buyers are today's sellers" to remind myself that trading is a simple game of profits, everybody is in a trade to make profit and when that doesn't go their way they will go out of the market or get taken out of the market, it's a simple truth.
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Buyers are always trying to enter at low prices to get the best value |
Think of a real market, when goods are sold buyers are always trying to get the prices as low as they can get it, this is why they bargain. A similar behavior happens with sellers who want to get the most value for the goods they have so they devise ways like auctioning to increase prices.
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You must think of price movement as a fluid relationship between buyers and sellers that is always looking for balance or fairness.
Buyers are always looking for low prices, sellers want high prices.
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Same auction like situation happens in the market, people buy at higher prices all the time |
An upward moving market will usually involve buyers buying at low prices, then holding hose assets till they reach a price high enough to sell at. This sell off drops the prices till it reaches a discount price low enough for new a new set of buyers who are interested in the price going higher to step in and drive the price even higher. This is a simplified summary of how a healthy asset grows.
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Thinking behing buyers and sellers in an appreciating (go up) market |
An opposite situation is true with assets that are dropping in value.
Prices will drop until they reach a price low enough to entice buyers who see value in the current price to buy. And former holders of such depreciating assets will want to sell to preserve the value of they're remaining assets. This is why falling markets can be brutal for most and profitable for many (those shorting).
This impulsive buying or selling behavior we humans tend to exhibit is the reason trends almost never move in a straightforward manner but must follow structures of higher highs and higher lows for up trends and lower lows and low highs for down trends. We call these points pivots.
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| HH = Higher High HL= Higher Low LH = Lower High LL = Lower Low |
Pivot zones
Pivot zones or turning points are points where price movement has reversed direction in the past, any point where price has turned in the past has the ability to reject price again, this is a very simple but very powerful concept in trading.
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| Highlighting the important pivot zones of a price move |
Price is either moving downwards, moving upwards or in a range. A range is formed when buyers are unable to take over from sellers or vice versa. As price moves in any of these directions it forms pivots where price reverses direction.
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| Up trend |
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| Down trend |
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| Typical range |
An uptrend will form pivot points of higher highs and higher lows, a down trend will form pivots of lower lows and lower highs.
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| HH = Higher High HL= Higher Low LH = Lower High LL = Lower Low |
During a range you'll see previous highs and lows repeat as they become points where price is balanced between buyers and sellers.
Pivots are price magnets, they are where large buy or sell orders were placed to change price direction, and are usually where new orders are waiting in the market, when price goes close to pivots it attracts price, price will hit the tip of these zones and get rejected or it will break this zone if strong enough.
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| Pivot zones attracting and rejecting price |
Any pivot point where price starts moving down is called resistance or price ceiling.
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All important Resistance and Support zones during this move |
Any pivot point where price starts moving up is called a support or price floor.
In an up market, price will always break resistance and form trend structure with higher supports. In a downward market you see lower and lower resistance.
Knowing how to spot resistance zones and support zones is very important in trading.
They are action zones where price will usually react.
Pivots get weaker the more times they are tested, think of them as walls of price rejection, the more those walls are tested the weaker they become and are more likely to be broken by price in the future.
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| This is how a strong zone gets broken, through persistence |
Another way to know if a resistance or support is getting weak is if it rejects price less and less the more it's tested, this means the buying or selling power at these zones are getting weaker.
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| Always watch out for weaker or stronger price rejections at pivot levels |
BIAS
Any asset's price is constantly in a war of two opinions: "is it going up or is it going down?"
If I was to ask any crypto trader if Bitcoin is bullish (climbing up) or bearish (collapsing) as of the 20th of Feb 2026— 70% would say bearish. Because as a matter of fact the market has been collapsing for weeks now and it's only beginning to slow down, this is not them being persimistic or emotional, this is an objective fact.
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This is why people think Bitcoin will go down (Bearish Bias) |
Having an idea what the Bias of the market is long term and short term should perhaps be the most important thing you do when you start any market analysis. Luckily for you, this is one of the easiest things to do but we'll get to it later.
Your bias is the skeleton on which every other trade management decision you'll make hangs, it determines when you enter and when you get out of a trade.
In a bearish markeyou should look for opportunities to sell, in a bullish market you should look out for opportunities to buy
In an uptrend you should wait for points when price is relatelively low to buy before it breaks up and in a downtrend you should sell as high as possible.
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During and up trend I would ideally buy at support zones |
Most strategies will involve entering trends at good zones and riding the trend till it changes. This is why making sure whatever asset you're trading is trending in any direction and not ranging is very important for picking what you want to trade.
It takes a lot to change the bias of a market, Bias is what keeps a trend going
Some assets have been trending in one direction for a long time
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| Gold has been going up in price for years |
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The Nasdaq has been trending up for months now |
Trends
A trend is a steady move in price towards one direction (up or down). It could be a short term trend or a long-term trend.
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| Same move appears as a short time frame trend |
A down trend is charactererised by periods when price consistently breaks (forms lower lows) downward. Continuing to form lower lows and lower highs. Lowers highs form resistance pivots that hold the structure of the downtrend and the lower lows form support points.
In an up trend price consistently breaks upwards forming higher highs that act as price resistance and form higher lows that form support for these trend.
Up and down trends
A trend line can be drawn by joining all the support or resistance zones forming a trend in a line to show the strength and direction of a move.
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| A sharp down trend move shown by sharp angle of trend line |
Trend lines are great for showing the gradient of a move, the angle of a trend line is usually a great indicator of the strength of a move as stronger moves will have sharper angles and weaker moves have duller angles.
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| A weaker down trend showing duller trendline angle |
Change in the slope of a trend line can often be a good indicator of a change in trend direction. It takes a lot to change a trend long term, for this reason—some of the most successful trading strategy focus primarily on riding trends until they change.
Change in polarity
God, in his infinite mercies has made is so that one of the most important trading concepts in trading also happens to be one of the easiest to follow and use in your trading, but it's so powerful that it's the primary technical tool many traders use to find good zones to enter or exit trades at.
It's called change in polarity. You know we have two poles, North and South Pole. Same applies with trading, we have support zones (price floors) then we have resistance zones (price ceilings). Change of polarity says that
when price crosses these zones, supports change to resistance and resistance changes to support. When price crosses a resistance when it comes back to that resistance it will act as a support, when prices crosses a support and goes back to reject that zone it acts as a resistance zone.
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Support becomes resistance, change of polarity in action. |
They change polarity or change sides when they become crossed by price. And in the future it's common to see these zones act as price rejection zones in favour of the current trend.
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Change of polarity for an up trend |
The price elevator model:
Think of price as a moving elevator. When it passes a ceiling going up, that price ceiling (formerly a resistance zone) becomes a price floor (support) and when it passes a floor (support) going down that floor becomes a ceiling (resistance) above you that you will then have to pass when you want to go back up.
This is how price operates, like an elevator.
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| Going up |
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| Coming down |
Floors become ceilings and ceilings become floors
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| Price ceilings becoming price floors |
Price floors and price ceilings are points of price reversal in the past are perhaps THE strongest zones for price to reject off of when going with the trend or for price to bounce off of against the trend, these are the zones the big banks look forward to because they know they will find the buyers or sellers they need to sell off or buy in at these zones.
You should always be paying attention to these zones on any time frame as these are the zones that have been proven to reverse price direction in the past.
Many professionals use price floors and price ceilings change in polarity as a serious
part of any strategy they adopt, it's a very simple concept but it's very powerful.
It takes a lot to change the market's bias, it takes a lot to change a trend, that's why trading against the trend is a very risky strategy— no matter how good of a trader you are —you should focus on 2 things:
1. Identifying the current trend and
2. Try to join the trend at a decent price point.
If the market is going up or down, find a good support or resistance to buy or sell at after you see a price rejection.
Now that you understand trends and how prices move, let's get into analysis of the long and short term direction of the markets with top down analysis.