Higher highs/higher lows

This is another popular method. Stocks that trend up make higher highs and higher lows. Conversely, stocks trending down make lower lows and lower highs in that order, and therefore suggest sustained weakness. This method makes intuitive sense. Unfortunately, it is not statistically as robust as it looks. Markets sometimes print lower/higher lows/highs that throw calculations off, before resuming their journey. Secondly, this method requires three conditions to be simultaneously met:

1. A lower low.
2. A lower high.
3. Both lower low and lower high conditions must be met sequentially, which only works in orderly markets.

Those three conditions have to be met consecutively in that precise order for the regime to turn bearish. Markets are random and noisier than people generally assume.

The main advantage of this method are entries and exits. On the long side, buy long on a low and exit on a high. On the short side, sell short on a...