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128 PART 5 - Principles O f Technical Analysis
low. If you tend to be more cautious and are willing to take a little less
profit, buy after the second low. We will discuss this in detail later.
Downtrend
When a series forms of two dropping lows and two dropping highs, this
defines a downtrend. In the chart above, we see a series of four dropping
lows and three dropping highs: a very clear downtrend. Notice that the
fifth low is higher than the fourth low. Does this mean that the downtrend
has ended? No, but there is definitely room to suspect an upcoming change.
Joy Global, JOYG – Uptrend
