Market structure: how trends form, break and reverse

Well, hello again to all dear students. We are going to start the topic of trends. I will begin these topics from the basics and explain them to you all the way up to the setups and advanced aspects and we are going to analyze them together. Up to this point, we have learned a series of concepts together that are necessary. The topics I discussed earlier were general points that you shouldn't overlook. They were extremely extremely important. We also got to know the market and learned which instruments we can trade. We covered what volumes exist, what we have access to, and where exactly it is that we are trading. Now, in order to avoid falling into the traps set by the so-called smart money in the market, we need to understand trends and volume. How are we supposed to analyze so that through order flow, we can find the best entry point and also be able to recognize if the market is about to move against us or if we have a process going wrong. We recognize that this is not possible at level one. We should be able to extract that from order flow in the smart money context and prevent our mistakes. Here's a brief explanation about trends. A basic definition. What do we call a trend? In fact, the meaning of a trend in the market refers to the overall direction in which that currency pair is moving. If it's making lower prices, that's essentially the price movement. If it's testing lower prices and continually making new lows, we call this a downtrend. The market goes up, then comes back down to make a new low and keeps making new lows, continuing this pattern. The basis for identifying and understanding this trend is that we look at it on the daily chart. Meaning from the very beginning when we want to start and do our analysis, we want to see what state our market actually not the market our trend is in. We start from the daily chart. This is the primary one. It's our main trend and we need to start our analysis based on that. If a market keeps making higher highs, meaning the price keeps increasing over time, we call this an uptrend. They are also called bearish trends or bullish trends. There's also a situation where the market keeps moving up and down between two prices. This is called a sideways or rangebound market. But the two concepts I put in parenthesis here are bullish and bearish. You might come across some concepts where for example you suddenly hear sometimes incorrectly that someone says this is a bearish market or this is a bullish market. We need to distinguish between the market and the trend. These two are different from each other. In other words, the trend and the market are different. And we will discuss this. We need to make a distinction. That is we can have a market that is a bullish market but is in a downtrend. We will see these cases. So therefore to summarize this slide, if the market is hitting lower prices, this market is in a downtrend. This trend is actually down. If it is hitting higher prices, this is an uptrend. Meaning it keeps making new highs. And if the price keeps fluctuating between two levels, we call that sideways. Understanding and recognizing this trend makes no difference for traders whether it's a bank level or a regular level. Basically, it shows you the range of being bullish or bearish and understanding this overall trend helps you make informed decisions. All right, let's move on to the next slide. So, these are the forms of downtrend, uptrend and sideways.

Now about the topic I discussed there. As I said in our market we have bullish markets and bearish markets. First let's see what this actually is. What does it mean exactly? You need to pay attention that we have an upward bullish market and a downward bearish market which creates different situations between the overall market trend and the bullish or bearish trend. In general, for example, the market can be bullish or the market can be in an upward moving trend, but at times its trend can still be downward. I want to give an example here, but first let's take a look at a formula together. This formula clearly shows us the current state of the market and it tells us exactly what condition the market is in. We then multiply the highest price that the market has ever recorded by 0.8 as indicated. This gives us a certain price. It gives us a specific price point. If the current price is above that price point, we call this a bullish market. Not the trend though, a bullish market. If the current price, the market's current price is below that price point, we actually call that a bearish market. Let me give you an example. Let's go to the chart together and take a look at it in the next slide. Here you can see the S&P chart in the daily time frame. You can see that the highest point the market has reached the highest highs is 4,820.3. When the market is here, these moves haven't formed yet. I multiply this. For example, the market has come down to around here and right now it's at this point. I have the highest highs. I multiply it by 0.8. It gives me a number 3856.2. I come here and draw a line. Prices above this become a bullish market. And if the market goes below this line, it happens here. In fact, it becomes a bearish market. Look, when I'm here, I'm in a bullish market above this price, but I have a downtrend here. So, if you ever hear it wrong somewhere, make sure to distinguish between these two. You can be in a bullish market, but your trend can be downward just like what happened right here. When the market first started in this area, if I draw the trend

from here, the market entered a downtrend. Now, I'm not drawing it very precisely. And here, the price has moved into the bearish market area. But when it hits this line for the first time, look at the reactions. The market is sensitive to these prices, meaning it's sensitive to these ranges. If the price goes below this, in fact, our market has made a 20% correction and this causes the price overall to have corrected by 20%. And if at that particular time the market or the specific stocks that you're trading or the trading instruments you currently have or even the indices are being valued significantly higher than this price then these points can give you truly exceptional opportunities to enter. Now, after you've learned about fundamental news, which refers to key economic events and data releases, when the price is down here, possibly due to recent market reactions, and there's talk of an interest rate cut by central banks or policy makers, these are some of the best opportunities for entry. If we are in a cycle of expensive money, you can use this discussion of bullish and bearish markets as well as these calculations in a variety of different indices. You can also use them in a range of commodities. You can use them in the gold sector specifically and more broadly in the overall stock market. But in currency pairs, this isn't very practical because they don't always hit new highs. Their markets don't grow significantly. The currency conditions of the two countries can become very different. Therefore, you really can't use this concept of bullish and bearish markets very much in the context of currency pairs. But it does have very broad and significant applications in indices, commodities and stocks. So you can consider the situation in this way. Just keep in mind that the context matters a lot when applying these terms, especially when you are dealing with different types of financial instruments. Let's take a look at another slide together. Again, this is the S&P chart in daily mode for the year 2018 that I want to show you here. Look, when in early 2018 the price reached these levels,

this was the bullish and bearish market zone here. It started another upward move and hit a new high. When it made new highs and then the market didn't make further highs, the value we get for this zone is right here. Look at the reaction to this zone and see how sharp and intense it can be. We're not supposed to trade directly off these lines. These zones are also for you to understand the market situation. You can even go and see these during the corona period on trading view. The first touch of this zone created a big jump up to here. This is a daily chart, but we need to take fundamental conditions into account. Look, when you multiply this by about 0.7, the price comes into these zones. The market has dropped or corrected more than 30% here. And when we suddenly see that no, this amount of correction is very large compared to the value of the S&P. If we find opportunities below this 30%, it's better to take advantage of them for entry. usually in stocks and so on. The initial assumption is that when we are in a bearish market, aside from considering value, speaking more from a basic structural perspective, we are mostly looking for short positions. And if it's above this, we are more interested in buy positions. But if we add valuation to it, meaning if you calculate a stock and it has corrected by 30 or 40% and if it doesn't have any fundamental or computational issues, it has appropriate PE ratios and so on, but it's still much lower than its value. Even for trading and holding regarding that volatility discussion I mentioned, you can hold it for periods of up to even 250 days. You can do this with some of them. if you want to buy with cash. This is also applicable in the crypto space for those individuals who are looking to trade crypto. When a particular market drops excessively and there are absolutely no fundamental reasons supporting such a decline and when valuation reasons simply don't justify such a sharp and significant downward move. If it's trading below bearish zones and offers what appears to be a good entry point, then it's a very very suitable and potentially advantageous opportunity. Here you also saw a few examples of its reaction to these bearish and bullish zones. The section on movement and correction so we can recognize what a movement is and what a correction is.

the main move. Here I have what I refer to as a main move. Now when this main move is actually in the direction specifically when it's in the direction of my main trend, we call it a movement. A movement in the trend's direction. For example, when we looked at this downtrend, these legs that are in the direction of the main move, these legs, these and these right here, we call them movements. And the moves that go toward correction or retracement, we specifically call those corrections. Now if we take a more detailed look at this in the previous slide the moves that exist here in this way we call these movements even this one this one right here and these legs as well we refer to all of them as movements and the specific move that is corrective in nature we call that a correction here it's the opposite when the price moves are in an upward direction we refer to them as upward movements and the moves that act to correct the trend we call those corrections. But this trend actually this image that we see together in this slide this is actually a movement and a correction which we can also refer to as a downtrend. That is it has just recently started this move but I have labeled it as non-definitive for now.

This is a downtrend that is still just a movement and a correction, meaning it's not definite yet. No decisive move has taken place. Now, why don't we consider this a decisive move? The reason is that for a move to continue, it needs to break through this area. Now the question is how much should we expect from this correction and this pullback? How much should it be for us to call it a correction?

Look the best number for the amount of retracement and correction is 50%. But in practice we usually actually consider it to be between 30 and 80%. In some cases, we even consider 20%. Although this amount of correction is very weak, but in certain specific situations which we will look at later, we might see this. However, usually a correction between 30 to 80% is considered a normal correction. But we should keep in mind that the correction can even go up to 100%. Now, as we analyze these in the upcoming lessons, we'll understand why sometimes the correction is 30%. Why sometimes it's 80%, and why sometimes it's 50%. We're not supposed to use Fibonacci to determine this percentage. We just look at it to see if it's around 50%. Normally when we have level one data, we visually estimate that if a move corrects by about 50%. Whether it's an increase in price during a downtrend or a decrease in price during an uptrend. In the standard case, we say this is a standard correction. But when we get into volume analysis, we realize that sometimes it's 30, sometimes it's 80, sometimes it's 20, and sometimes it even goes all the way to 100%. With volume-based reasons, we understand why the correction sometimes reaches 100%. Now the parts we need to know and pay close attention to include the important fact that when we carefully consider this movement the very top point of the movement is actually the open or close that exists right there as we observe now it could be a green candle or a red candle that becomes our very top point. In fact, the very top point is the open or close of our movement and the highest shadow that has formed. That too actually becomes the high of the movement point which lies in an area between this close and this. We call this area the important area. Similarly, in a deep market, the lowest close and the lowest shadow give us an area. This area will be a support resistance zone that is useful for us and we will set our rules based on it. The same applies in a correction whenever such a situation occurs. Look at the open and close here. For example, there is a green candle. The open of this candle and its lowest shadow. Between these two, we have a very important area. All right. Regarding 100% corrections, there's a point that needs to be mentioned here. When we identify these points in this way or like this, this point, this point and this point, we assign names to these. There are various naming conventions A, B, C or 1, 2, 3. What we use for naming is P1, P2 and P3. Here as well we label the movement from the bottom as P1, this point as P2 and this point as P3. When the market closes below its P2 and suddenly comes and closes below this area, we consider this a definite downtrend. Until the market comes back here, wicks up and the candle closes fall above these zones. we will still consider it as not definite. This is a principle that we need to keep in mind. So when we say the market can correct up to 100%. It means that this move can retrace all the way back as long as even if it wicks and the price goes higher. But when the market is about to close, its close should fall below this area. It should close below this important area that we've selected. In that case, we still say that this was a 100% correction. So therefore, a very important point in Dow theory is the open and close points which we need to pay very very close attention to when determining and identifying whether something is a correction or not. It closed above this. So the close points are very important for us or a definite trend will be significant for us if it closes below this area. Look, I still haven't moved on to other charts. That is this is neither a 5-minute chart nor a 10-minute chart. Our analysis is currently on the daily chart and that means every chart you see in the slides unless I mention its time frame is all on the daily chart. So we've identified these movements up to this point in this way and we've understood what the movement is, what the correction is and what their key points are. These are still not trends. They are trends in formation or uncertain trends. Let's move on to the next slide and take a look together. We want to look at the structure of an uptrend and a downtrend. As we saw, look here, we have a close point that is the lowest close compared to all of these. The first time we drew this area and then a bullish candle formed, our important area was here between the lowest open close and the highest shadow. So when a longer shadow forms, notice that the closes are above this zone. Our important area shifts and moves to this point. So after that we will have this zone. This is our important area that determines whether the trend will go lower than this or higher than this. We can also see it like this. The first time this pivot point formed the highest open or close. There might be a red candle forming here at this moment. Right now this is the close. It's possible that up here a red candle opens and comes down lower from here. That means the market might have opened with a gap here. If you look these candles are also part of the primary trend. You see the chart. The first time my area was here important area. Later when a shadow hit my important area, it became a bit wider. Okay. The market has come down. I have an open and close here which creates an important area between these two and up to here becomes P3. When you see that the price comes up and then closes above this particular zone at that point what do I have? I have an uptrend meaning my trend has just formed. So before I get this close up here, even if the price goes up and down dozens of times down here and doesn't make any move, as long as it can't break through my important area and comes back down again, even all the way down here, as long as it doesn't cross this important area of mine, as long as it doesn't close below this area, even if it comes below this and then later goes up and breaks it, at that point I will have an uptrend. As long as it doesn't break above this top, I won't have a definite uptrend. So, the importance for us is the close above these areas. Previously in Dow theory, these shadows were not given much attention and our main focus was on the open and close points. Meaning, we only considered these lines. But based on the statistics and probabilities we analyzed over a long period, we realized that if the close is above this area, it will be extremely powerful. A close within the important area also carries significant weight and there is a real possibility that an uptrend may potentially form in the near future. However, according to recent research, it is better for the close to be above this area. But while you are analyzing the market you have an area that is marked as an important area like this and the close is within that area you can still consider it as having crossed that area but as I said it's better if it closes above this area. So our naming will be P1 and the P2 area and the P3 area. Okay. So when it goes up, we have a close in this area. We also have a shadow here. This becomes our P2 area. Then it comes back down again. This becomes our P3 area. Look, the market opened here with a gap. You can see this in stocks. At times when there are earnings, meaning when companies report their earnings, some markets open with a gap to the upside. Some of them even open with a gap to the downside. So even if the market opens like this and closes above this level, we again say that our trend has formed after the breakout here, if it immediately comes back down like this, we no longer consider this an uptrend and we treat this second one as a correction. This is movement, this is correction, this is movement, this is correction and again this is movement and this is correction. This line here again becomes movement. Sometimes this important area also appears like this meaning it doesn't have a shadow and we only have an open range here where the market needs to be able to close above this range here too. You can see the important point is that if you want to be precise in drawing these it should be done like this. Look my first range was here when I was drawing it below this line.

The close of this candle is red and it's between its wicks. These two were my first important zones. Later, this same line remained. This wick was added. But then look, it opened from here. As a result, my line ended up on this green candle. So, this area becomes my P3 zone and this one passes through. And if it moves upward and passes through here, I will take this direction. Again, this structure is an uptrend. when it is forming. So if I want to look at it, the P2s are always positioned above the previous P2s and the P3s rise one after another like this. It can even as I told you come down and make a 100% correction up to here that is after this. But on the condition that here in this important area where this is located let me draw this line more clearly one more time. I mean this area

provided that it comes and closes here. It can even wick below this area and then come back up. But the close should be here. That is the candle should close like this with its close up here above this zone. We still consider this a correction. So in this way but what matters to us is that the highs if it's an uptrend it should keep making higher highs. So this structure and formation will be considered an uptrend for us.

All right, let's move on to the next slide. We'll also look at the structure of a downtrend in the primary trend and on the daily chart. Look here is our highest open point. The candle is red and this wick, this area is what we have. This is the P1 zone. Market moves down. The lowest close and the lowest wick form our P2 zone. it makes a correction again we have this zone P3 look this is the zone I mean see if it closes within this zone that's acceptable too that means we say an uptrend has occurred this is on the condition that if 1 2 and three are present and it gives a close below this we say a downtrend has occurred or in an uptrend if it comes like this and passes through this existing zone and gives a close above this zone There too we have 1 2 and three. As soon as it gives a close we say we have an uptrend here.

The exact same thing happens here as well. Here if it's important within this zone. Look those that are higher are not acceptable.

It might come like this. Even if you disregard this red candle it might come in with a green candle inside this and then return with its close being above. This is also not acceptable. The close must be within this zone. So this red candle and this other red candle are important. But still the best case is for the close to be below the area zone like this candle. However, if this candle or this particular candle happens, they are also considered acceptable. Therefore, if the open is inside this, meaning if this candle isn't here, let's just assume for a moment that this red candle isn't here and this candle is green, the market closes here, opens from here, and this green candle closes here. No movement has happened yet. No breakout has occurred from here. There hasn't been a close below this area. So, we still don't have a definite trend. In the same way again the P2 points the P3 points like this can become a single line. Look here in this important area you can see that a shadow has formed. The shadow can even go below this area. But what's important is that it has closed here. So this structure is set up in this way. Look this candle is also acceptable. The close should be within the specified important area.

That's it. Meaning even if we still can't see this particular candle and we're on the day when this candle is closing, this situation is acceptable for us. We can say that this trend has formed. But statistically speaking, if it closes below this, it's much better. However, we will also take this into account.

All right. So this is also the structure of a downtrend. Pay close attention to these P1 and P2 points. Draw these on different charts. It's very important that you practice this a lot. Understand this in the primary trend and recognize where it is. Now we get to the topic of breaking the trend. We have an uptrend. Let's look at it like this. Here for example, it started from down here. Let's assume this is one. This is two. This is three and these twos and threes keep going higher. We want to see where a trend ends where a trend gets exhausted and we say that there is a possibility our trend might reverse. Before that there is a situation that must happen in the market called breaking the trend. So I have this last pivot. This is my non-definitive pivot and it's coming down. So look, even at the time when it's inside this candle, this pivot is still non-definitive. I put a question mark and this piece is also non-definitive. When it passes this point, it becomes definitive. It came here and formed the pivot. It's making a correction. This pivot is of a non-definitive type. It's non-definitive. When it passes through this area and closes above it, then this becomes definitive. And this one also becomes definitive. All right. Now this move has happened. We have a definitive piece in the market. Meaning it has passed this point and gone higher. It has formed a pivot. That breakout is the important point for us. That breakout is our priority. And it's important that it happens at a definitive point, not at non-definitive points. So you see when the market comes down we still think it's in a correction while it's in a correction suddenly it comes and gives a close in this important zone like here this red one or like this it gives a close when it gives this close in this area we say that this trend has been broken a break in fact a significant breaking has occurred here. So this is the very first sign that we realize the trend is about to reverse direction. Now if from this point it goes into a correction, we should look for setups to enter a short position. So this is a very important point to remember. Now is this break, this break that happens right here, how reliable is it really? We're going to combine these with volume so that we can increase their accuracy. For now, we're looking at it at level one. Meaning, you should be able to make initial identifications visually. So, see how important it is for you to correctly identify and measure the definite and indefinite points. Here, I can draw this. It broke through and closed. I say this pivot is definite. I draw this line here. I say this is the point it shadow is also here the first close that happens I say yes this is also my definite pivot when this one pierces then this piece of mine also becomes definite as long as this is up here and it's in correction and hasn't broken through this area this anchor actually it's a correction and it's not definite when it breaks through and this candle closes above this area that's when I say okay this one is definite and that one is definite too. So while it's turning my last definite point is here. I mark this point. As soon as a close happens in this important area I say okay my trend is broken. Now I need to look for a potential short position. I need to see if the market corrects and what setup it gives me so I can enter sell the market and join the downward move. But this break is just the very first condition that we want to use. It's the first alarm for us.

Well, another point we can add here in the broken or trend break section is that we see this candlestick has closed here which is acceptable for us. If we want to put it in percentage terms here, we can say that there is an 80% or let's say 70% chance that our assessment is correct. Also keep in mind that the market is never completely certain. We are putting all these factors together to tip the risk in our favor. In other words, so that we take on less risk. If you think of the market as a seesaw by examining each of these conditions one by one, we want to add more weight to our side so that our chances of winning are higher, much higher. We shouldn't just act blindly. But at the same time there is no absolute certainty either. We are just increasing the probabilities so that if we find ourselves in a situation where say 70% meaning our trading style is such that in 70% of cases the setups we want actually occur. We will have a good win rate. Later, we will add risk-to-reward to this so that even if we want to trade in 50/50 situations, thanks to a high risk-to-reward ratio, we will still end up profitable. But if the close happens below this area, that 70% probability increases, for example, to 85%. Meaning the likelihood that the market will drop further increases. We will see breakouts where, as you'll see in upcoming lessons and examples, a breakout occurs, but then the market reverses and continues moving upward. In other words, it was just a simple breakout. But why did this breakout happen? We can analyze the reasons for it both fundamentally and in terms of volume conditions. So, it's necessary that we don't just look at the technical aspects alone. We should also learn about other factors alongside it so that the accuracy of our work increases. So definitely make a note of this breakout. It's a very important point to remember and keep in mind. The most important aspect is where the close happens. Whether it's within the important zone or area or below it, it must have occurred on a decisive move. Absolutely without a doubt. All right, let's move on to the next slide. We just covered the topic of a breakout here. Now, we're getting to the discussion about trend reversal or the reversal of a trend. So, the stages of forming a trend reversal, meaning we are currently in a downtrend. It looks just like this. We are clearly in a downtrend at the moment. We want to see how the market shifts and transitions into an uptrend. What are the conditions for this? What setups need to form? The first setup is that initially at the pivot point, we need to have a definite pivot point like here.

It's very important that we have a definite pivot point. In other words, a clear pivot to pivot has formed after this. That means when I come here, a downtrend must have passed through here and I need to have a definite pivot point right here. A pivot to pivot should also look like this. It should have formed in this way from the distance that happens down here. Here I have a pivot. Meaning when the market is here, I have an uncertain pivot at this point. Now the market might come up like this. Look, it's created a kind of uptrend. Pivot, pullback, pivot, pullback. But all of them are uncertain. Why? Because they still haven't been able to get a definite pullback. Now, as for the reasons why these pullback points are important, let me briefly mention here that we'll learn about this in future lessons as we move forward. When the market comes down like this, the stop losses are set based on these points. In fact, one of the advantages of trend trading was that we can trail our stops or we want to manage our positions and risk management based on these points. The stops are trailed in this way. So the last point that exists here and when this forms many of the stops are trailed and placed at this point. So a significant amount of liquidity has accumulated up here. This is important because if this liquidity is going to be filled and the move is to happen, it absolutely must close. If it just makes a move and creates a shadow up here and the close returns above, in fact, the existing liquidity here has only been used to trigger the liquidity in the order book or pending orders which we will discuss further in the topic of stop fishing. So the first condition is that I need to have a base area. The second condition is that I need to have a breaking trend. That is when I have the base, a breaking trend is built on this foundation. The first thing that happens is that I have a breaking trend. This needs to happen.

It should also make a correction. Once it makes this correction, it should break through its pivot. In other words, it should make a move like this. That is, it should also break the second pivot. A move like this tells me that now my trend has completely reversed and I've entered an uptrend. This is a very important point. It's true in all markets. We really need to pay close attention to this. If it comes here, closes, pulls back, and doesn't break through this level. I still haven't reversed the trend. I'm still not in an uptrend. The market can come here. For example, in the first series, you see a fish coming. It came and made a shadow. It can come back down from here again and continue on its way. It could do this and go even lower. So until the second breakout happens and I don't have a definite point to point, the reversal hasn't occurred yet. But as soon as it breaks this level, I say my trend has reversed and now I have an uptrend. So how does the naming work after that? When the trend reverses, I go back from the bottom. The point that was supposed to be my non-definitive pivot, I now call it P1. Here is my P2 and here is my P3. However, in calculations, this distance might be very large and the correction for it might be small. We use this movement that is we calculate the correction based on the size of this movement to say that here a correction of about 30 to 35% has occurred. We calculate the correction from here. But for certainty, we assign the label P1 here. P2 is here, P3 is here. And in the same way again here is the P2 area and here is the P3 area where this breaking occurs and it continues like this upward. Look, when it comes to applying these percentages once we move to the chart, we'll examine the examples there. In those parts where the corrections are weak, falling below 20%, or where there is no correction at all, for example, we shouldn't suddenly pick just two candles. We'll go over these together on the chart and I'll explain there how we should approach it. This is just the reverse setup. Meaning unless these conditions are met, we don't have a reversal. Consider the exact opposite as well. That is if it's an uptrend, the same condition should occur in reverse. So you can say that my trend has reversed from uptrend to downtrend. All right. So now we've understood how a reversal takes place. Now let's move on to the next slide. Now we want to analyze movement and correction through volume. Let's see whether this movement that's happening is correcting upwards or downwards. How accurate are these? Is this movement valid? Is this really a movement? If there's any conviction behind this move, there should be volume supporting it. We want to analyze these through volume so we can increase the accuracy of the trend discussion we had. There are four very very important points that you need to keep in mind. One is movement with increasing volume, movement with decreasing volume, correction with decreasing volume and correction with increasing volume. What does that mean exactly? That is when I see a movement forming like this in this range which I call the movement phase during this period of time. If this movement is legitimate and smart money wants to back it, the volume should also increase during this time frame. If this movement isn't genuine, as I mentioned before, sometimes a break might happen below the zone. A breaking of the trend might occur below the zone, but then it could come back up again. This is one of the reasons why we need to analyze this within the trend. At that point, we also have a movement like this. the movement comes and I'm observing it within this range. If during the time frame that exists this volume decreases, that means something to me. This means that there is no belief behind this move. There's no volume backing this movement. There's a chance it could be fake. Like those situations where a breakout happens like this, but then the market reverses and goes back. If we take a look in that breakout that happened probably in the range where the breakout formed its volume decreased over time. Well, we have another topic to discuss as well. Correction means these ranges these intervals.

Now, when I draw this in an uptrend, these ranges that are corrections, one of the conditions is that over time they should be decreasing and form with decreasing volume. But sometimes no this correction happens with increasing volume. The principle and rule is that if the movement is correct, its volume should increase over time. If it's a correction, its volume should decrease over time. So these are our two main principles. If these two principles contradict each other, that's where we should start questioning things. Let's go to the next slide and look at these on that slide. So as you can see here, we have a downtrend. The market is dropping down. When there's a movement, I want to see this move. This is EUR/USD. It's the daily chart. When this movement is forming, if it's a healthy and proper move and it's being supported, its volume should increase over time, the slope of the volume. And when the price enters a correction or retracement phase, you can see here as well that the volume has decreased. In other words, the volume slope has been downward. When there's movement here and it's forming, this is also our pivot point. Meaning these are the P2 points. When it's breaking through those points, you can see that the volume increases sharply at those moments. Look, when there's a correction, this is a daily chart. This correction has taken at least a month to complete. During this correction, you can see that the price meaning it's been a correction where the volume has dropped. So if we want to correctly identify movement and correction, a healthy movement is one that is supported by volume. Over time, its volume trend should be increasing. A proper correction is one where over time as the price rises during a downtrend. When the price is going up, if the volume looks like this, we realize that this is a correction. When it moves toward a movement, you can see the volume increases as it heads into the movement. Here you can see in this leg we have an increase. It moves toward a correction and the volume decreases. In the same way we reach a point where I have a downward movement here but its volume has decreased

here. I had a movement at this point. Look the price is lower. P2 is lower but its volume has increased. here when it went into a correction the volume also decreased. That was correct. When it entered the movement what happened was that the volume decreased whereas the volume should have increased. Now let's assume that this has moved toward a correction. We still can't see this side of the chart. What happened is that during the correction the volume went up. So when we're in a downtrend and the position of the volume in the movement and correction switches, the likelihood of a price reversal increases. In other words, even before this setup forms, this gives us that alert. Now I might think, well, maybe in this leg, the volume has gone up a bit. This move should be a movement. When this move is a movement, there should be volume behind it. But I see that in this movement, the volume is decreasing again. And it doesn't even reach this lower level. And when it goes up again, I think it's probably a correction and its volume should be low. But the volume slope actually increases. So when I see these two conditions before the main move even starts, look, when it corrects and I see that this movement doesn't have volume behind it, I consider it a correction before the trend forms or a breakout happens. Here I make my entry based on my setups. Why did I gain this ability? This strength and volume allowed me to analyze this part of the market. Along with the smart money we talked about, I can enter before the trend forms. So this was a very important point that we needed to pay attention to here. There's another point that we want to address again in the next slide and that is the potential for movement when considered in terms of percentage and the extent of the correction it makes are actually quite different from each other. This means that even if two movements seem similar, the percentage change and the depth or size of their corrections can vary significantly. Now at this point I turn my attention to its volume to further analyze the situation. When the movement has formed, it's going through a correction. The more the percentage of this correction increases, if 50 goes up to 60 or even 70, and if the volume also decreases more over time, it gains much greater potential for a reversal. Usually, when it goes above around 60%, the market's potential for a reversal is higher. Look, I only chose this Fibonacci for the purpose of marking the percentages. We're not planning to use it itself. We just want to know that if it comes into the range between 60 and the maximum and if volume decreases in these areas, the potential for a reversal increases. If we see a setup in these spots, we can enter very quickly and decisively. All right, up to this point, these topics were about trend structure. Let's move on and in the next session review these items on the chart together one by one and take a look at them.