Markets alternate between two regimes. TRENDS make directional progress: higher highs and higher lows (up) or lower highs and lower lows (down). RANGES chop between a ceiling and a floor while the market decides. Most strategies work in exactly one regime and bleed in the other — knowing which one you're in matters more than any indicator.
Reading structure
- Uptrend intact: each pullback bottoms ABOVE the last low. The first lower low is your warning shot.
- Range: two or more touches on both a ceiling and a floor. Middle of a range is no-man's-land — worst place to enter anything.
- Trend day tells: shallow pullbacks, closes near extremes, moving averages fanned apart and pointing one way.
The costliest habit in trading: fighting a trend because it's 'gone too far.' Strong trends punish counter-trend entries longer than your stop can survive.
BTC specifically loves violent regime switches — long overnight ranges, then an impulsive trend leg that does a day's work in minutes. The knockout design of the Sim Challenge mirrors that reality: chop kills both sides, trend pays one.