UpTrends & DownTrends Bar Chart Example

The chart above of the Dow Jones Industrial Average ETF (DIA) illustrates many aspects of the bar chart. First, since this is an average of 30 stocks, the price ranges tend to be moderate and consistent in size and the price movements tend to be orderly. Second, this chart shows that uptrends are created from sequential price bars with higher highs and higher lows and that downtrends are created from multiple price bars in sequence with lower highs and lower lows. Also, transitions from downtrend to uptrend often occur when a price bar with a higher high and higher low comes after a downtrend; transitions from uptrend to downtrend often occur when a price bar with a lower high and lower low comes after an uptrend. Typically, the completed transition from downtrend to uptrend occurs when prices with a higher high and higher low break above the downward sloping resistance trendline (the first and third [from left to right] orange lines). In contrast, the completed transition from uptrend to downtrend occurs when prices with a lower high and lower low break below the upward sloping support trendline (the second and fourth [from left to right] orange lines).