Developing one’s own trading tactic: how to determine the global trend (stage 1)

Let’s consider each stage by the example of a trading tactic based on MACD and Parabolic. We’ll start with the first stage - determining the trend on a long time frame.

Stage 1. We will determine the direction of the global trend on a daily chart

Let’s look at the daily chart (Figure 1). We can see that the trend is upward as :

• Each successive high of the price is higher than the previous one. According to the Dow theory this is an up-trend.
• As there is no bull divergence between the short term average of MACD and the price it indicates that the uptrend is rather strong.