If trading with indicators isn’t something you like, then the other most commonly used way of identifying a trend is through price action. The use of price action is one of the oldest and considered by many the most reliable method of identifying trends in any market.
During an uptrend, price will make higher highs and lower lows. During a downtrend, price will make lower lows and lower highs. An ideal up trend would look like the following.
It is clear that price is in an up trend. Each new high is followed by a higher low. The previous high is then broken by a new higher high. Likewise, a higher low is made and then price continues on upwards.
Ideal down trends appear as the above image. As the market moves down, lower lows are made. Each lower low is followed by a lower high. The previous low is then broken by a lower low and another lower high. This continues as the market moves down.
The problem, however, is that markets rarely form as the above two images and up trends and down trends often may not appear smooth as the examples above. A more realistic up trend may appear as the following:
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The above image shows a more realistic up trend on the EUR/USD. This up trend could be in any market and this price action is very common. While not as clear as the previous ideal up trend image, it is clear that price is moving upwards. However, the main difference is that the higher highs and higher lows are not as obvious. With a little time you can, however, spot that price has made higher highs, retraced, formed higher lows and then continued on upwards. Here is a real world example of a down trend.
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Much like the real world up trend example, the down trend varies somewhat from the ideal down trend image. It is obvious that price is in a down trend and has moved down through the market. However, once again, the lower lows and lower highs that price made as it moved down are not as clear. Regardless, you can still see that price has made lower lows, rallied to form a lower high before continuing down.
While using price action to identify the trend is one of the most accurate methods, there are a few problems. Sometimes price will not move in any clear direction. A classic example of this is as follows:
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It is clear that in the image above, price is moving more sideways over time than it is trending in any one direction. Using price action to identify trends is more difficult than using indicators. However, with enough screen time and patience you will find that price action is much more accurate and reliable for trend identification.
If you are just starting out using price action to identify the trend, be patient. The more time you spend watching charts the more natural it will be for you to spot the true trend in the market. Also, avoid using lower time frames to identify the trend. It is recommended that you apply price action to the 4 hour and higher charts only.
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