CADET · Module F02: Your First Trading Decisions · About 25 minutes
Big idea: We are learning to describe a price chart, not to predict a guaranteed future move.
Your mission today
Recognise an upward path, a downward path and a sideways range. Learn why people draw support and resistance zones without treating them as magic lines.
1. Reading direction is simpler than it sounds
Imagine a toy car driving uphill. It reaches one hill, rolls back a little, then climbs to a higher hill. Its dips are also higher than before. A price chart can sometimes look similar.
When a price repeatedly makes higher peaks and higher dips, people often call that an uptrend. When its peaks and dips are getting lower, people call it a downtrend. When price goes back and forth within roughly the same area, it may be sideways or in a range.
These labels describe something we see. They are not guarantees about the next move.
2. Tiny price story: upward path
Consider these invented price observations in order:
$10 → $12 → $11 → $14 → $13 → $16.
Notice the little steps back. The path is not a straight line. Yet each new high is above the previous high, and the later dips stay above earlier dips. That is why someone might describe the movement as upward.
A downward path could be:
$16 → $14 → $15 → $12 → $13 → $10.
The market still bounces sometimes. Downtrend does not mean every candle is red.
3. Sideways prices and repeating areas
Imagine price spends a whole afternoon bouncing between around $48 and $52. It approaches $48, moves back up, reaches $52, moves down, and repeats.
Traders may call the lower area around $48 support because buying has appeared near that region before. They may call the upper area around $52 resistance because selling has appeared there before.
Think of these as areas to watch, not concrete floors and ceilings. Price can cross them. The line you draw is a reminder of past behaviour, not a force that controls the future.
4. What if price breaks out of the range?
Suppose the same market rises from $52 to $54. You might say it has moved above the earlier range. People often call that a breakout.
But what happens next is unknown. Price could continue higher. It could also fall straight back inside the range. A move outside a line is not enough to prove a profitable trade.
For Cadet, practise describing what happened: “Price was mostly between $48 and $52, then moved above $52.” Leave the prediction for later levels.
5. Change the zoom, change the picture
On a very short chart, you may see price rising. On a much longer chart, the same rise may only be a small bounce in a larger decline. Both views can be accurate descriptions of different periods.
Always include the time setting when you describe a chart. “Uptrend” without saying what period you mean is an incomplete observation.
Practice mission
Draw three paths using six dots each:
- One making higher peaks and higher dips.
- One making lower peaks and lower dips.
- One repeatedly moving between two horizontal areas.
Label them up, down and sideways. On the sideways picture draw a pale band near the top and bottom. Those are your example resistance and support zones.
Before your next lesson
You should be able to describe a simple price path without saying it is certain to keep moving that way.
Coming next: The single question that matters before you ever press Buy: how much could I lose?
