Trend-change level
Also called: trend reversal level, reversal level, trend change level
A trend-change level is the first of the eleven level types in the ChartThread course. It marks the price where a trend ended: a move that ran for days or weeks, visible on the daily chart, stopped at one price and turned. Like every level in the course it is an exact number, never a zone.
How to draw a trend-change level
- Open the daily chart and find a big, visible move: a long fall or a long rise.
- Find the level-forming candle, the candle where the move ended.
- Take its exact low if it stopped a fall, or its exact high if it stopped a rise. Never the open or the close.
- Draw the line from that candle to the right.
Example. A share falls from 80.00 to 50.00 over six weeks. The last candle of the fall has a high of 54.10, a low of 50.00 and a close of 53.60. The trend-change level is 50.00. If price comes back a week later to 50.40, that is a test of the level, not a new one.
Why price stops there
Price does not stop a big move by itself. When a fall ends at one price, a powerful limit player was waiting there with limit orders and bought what everyone else sold. A rise that stops and returns shows a big seller at the high. Levels that stop a big price drop are very powerful, because the buyer had the capacity to absorb a whole wave of selling.
Volume around a trend change
The course’s rule for the most powerful trend-change levels: volume decreases on the way in, because no one wants to be first, and the biggest volumes are inside the channel rather than at the extreme. On SpaceX’s perpetual contract in 2026, volume in the last week of a 54% fall was 5 to 9 million contracts a day, against 13 to 25 million on the big days earlier; after the low at 104.31 it jumped to 16 to 21 million. Not every trend change shows this, so treat it as a supporting sign.
Levels inside the channel
Between trend changes price leaves smaller turns. A level inside the channel (the horizontal range between two levels; the course never uses sloped channels) can be drawn only if there are at least four stops between neighbouring levels. With the course’s stop of 10% of the daily average true range (ATR), four stops are 0.4 ATR. With a daily ATR of 5.00, two levels must be at least 2.00 apart.
Trend-change levels in this course
Level type 1: trend-change levels walks through SpaceX’s 104.31 and gold’s 4,889.97 on real data, including the volume. The candle that forms a level shows how to find the candle, and no level is strong on its own explains why the situation around a level still decides.
Questions about trend-change level
What is a trend reversal level?
It is the price where a trend ended: the low of a fall that stopped and turned up, or the high of a rise that stopped and turned down. In the ChartThread course it is called a trend-change level and is always one exact price, taken from the high or low of the candle where the move ended.
Why do levels that stop a big fall matter so much?
In a long fall everyone who is losing sells. For the fall to stop at one price, a buyer had to have the capacity to buy out all of that selling. That makes levels that stop a big price drop very powerful.
What does volume look like into a trend change?
On the most powerful levels volume often decreases on the way in: no one wants to be first. The biggest volumes are traded inside the channel, not at the extreme. It is a supporting sign; not every trend change shows it.
What happens if a trend-change level breaks?
A trend-change level should never be broken. If price closes beyond it, the player who stopped the move is gone or filled, and the level must be confirmed again, by an exact touch or at least a false breakout, before it can be used.