What the heck is a "Trend day?"  The long explanation!!

This is an important concept to have in your mind and in your definitions.  A trend day is a day where the market makes a steady move in one direction.  Lets say the market is soybeans and it opens at $6.50.  In the first 30 minutes it makes a high of $6.55 then about an hour later it moves up to $6.60 and then pulls back to $6.53 only to move higher 30 minutes later to a new high of $6.63.  Then after another 20 minutes makes a new high up to $6.65 and closes at $6.63.  This is a trend day UP.  A trend day down is just the opposite. 

The concept says that the market will trend during the day in the direction of the current move.  Look at the chart below.

Above is the July Soybean 30 minute chart from 12:00 PM June 15th, 2005.  On the chart, the red bar is the first 30 minute period of the day.  The red arrows pointing down show the first bar of a trend day down and the blue arrows show the first bar of a trend day up. 

Look at the last blue arrow which was June 9th.  Notice the market moved higher all day long.  This is an indication that there was buying through out the session.  Now look at the next day.  Notice that the high and low of the day were made in the first 30 minutes.  This is a consolidation day and the market had no real direction but a drift lower.  The next day which is the 13th of June is again a consolidation type day with no directional highs or lows after the second 30 minute period.  On the 14th again we see the high and low were made in the first 30 minutes of trade so we have no trend day.  As I write this at 12 noon on the 15th, we have a possible trend day UP working.  Notice that there are three periods that make new highs after the first 30 minute period; however, we have a reversal bar showing on the 4th bar on the graph.  This could indicate a possible trend day reversal.  This is when we start to have a trend day in a direction only to reverse and go the other way later in the day.  So as I write this, I now must start to look at the possibility of a major trend day reversal.  If we close below the low of the first bar, this will indicate a change in direction and instead of a trend day up, we will have a trend day reversal.

The bottom line is that trend days are usually when you see changes to the open interest and participant involvement.  A move in a steady direction would indicate a group in the market either buying or selling all day long.  Look at the chart one more time.  Notice that on the 13th we gapped higher in the first 30 minute period but then we just set there.  From this I can tell you we didn't go up on steady buying.  All day long, the selling was there and no trend developed even though we were higher on the day compared to the day before.  BIG DIFFERENCE.  In other words, on the 9th we closed higher then the 8th because there was buying all day long on the 9th with sellers backing up.  On the 13th, we closed higher than the 11th because we OPENED higher NOT as a result of buying TAKING us there.  Do you see it??  HUGE difference.  If you don't see it re-read it until you get it.

It can also lead to an interesting follow up day.  Once you have a trend day, usually the next day WON'T BE ONE.  This is not always true.   There is almost two trend days down back to back on the 5th and 6th of May.  I don't like to use the 5th as a real trend day down because we actually were higher all day long from the previous day's close.  This is not a true trend day down but it was a day that we made new lows all day long.  So once we have a trend day, we can trade the following day expecting the high and low of the first 30 minutes to be resistance and support.  Doesn't always work but your odds are pretty good after a trend day that things will consolidate.  I should add...if it is a weather market, anything is possible.

NOW THE REST OF THE STORY---

AFTER THE FACT:    It's now 2 PM and I can see the rest of the chart. Here it is.

Now the question...Is it a trend day?  Technically it's a half a trend day up in that we closed higher and moved higher for half of the day.  Once we have three 30 minute periods where we make new highs and then we close higher on the day and nearer the highs than lows, we have a trend day UP.  It is a weak trend day up but it qualifies.  This could setup a sideways consolidation day tomorrow.  One thing is for sure...This was not a reversal day and the trend remains UP!!!