Reading trend structure: higher highs and higher lows

Swing highs and swing lows

A swing high is a peak with lower prices on both sides; a swing low is a trough with higher prices on both sides. Connect them in order and the chart becomes a zigzag you can describe in words.

The three structures

• Uptrend: each swing high is higher than the last (higher highs) and each swing low is higher too (higher lows).
• Downtrend: lower highs and lower lows.
• Range: highs and lows repeat around similar levels, with no clear direction.

Where the trend is invalidated

In an uptrend, the most recent higher low is the line in the sand. A close below it means the pattern of higher lows has broken, and the structure is no longer an uptrend. That does not automatically make it a downtrend; it often becomes a range first.

This is also why many traders place their invalidation, or stop, just beyond the last swing low in an uptrend: it marks the point where their reading of the chart is wrong.

Practical tips

• Start on a higher timeframe to find the main structure, then zoom in.
• Ignore tiny wiggles; count only swings that stand out clearly.
• Expect pullbacks inside a trend. A lower close is not a break until it takes out the last swing low.