Trend Following Strategies and the Discipline to Ride Intermediate Rallies
- Jul 18
- 8 min read
In times of market uncertainty, it's easy to get caught up in the fear of missing out or the anxiety of entering too late. Many investors try to guess the top or bottom, hoping to catch the exact moment for maximum profit. But this guessing game often results in mistimed trades and missed opportunities. At Market Turning Points, we don’t believe in predicting extremes - we believe in structure, discipline, and trend-following strategies that align with proven cycles.
Intermediate rallies - those powerful upward bursts within broader trends - are opportunities that reward patience and discipline. They occur within both bull and bear markets and learning how to ride them without overcommitting or bailing out too soon is key. The goal is to act when price confirms direction, not to gamble on what the news or the crowd says will happen next.
This article will walk you through how to spot intermediate rallies using price channels and moving average crossovers, how to stay in sync with structure, and why trying to predict tops will only hurt your long-term gains. If you’ve ever felt frustrated watching the market climb without you, or nervous holding when everyone else is calling a top, this guide is for you.
Why Guessing Tops Fails
Most traders at some point fall into the trap of trying to predict a market top. The temptation is understandable - you want to take profits before the market turns. But more often than not, this approach leads to premature exits and re-entries based on emotion rather than evidence. It feels smart in the moment, but over time, these guesses wear down your returns and your confidence.
Market tops rarely appear with clear signals. Even seasoned professionals mistake pauses for reversals. Structural weakness develops slowly and becomes clear only after key levels are broken. By trying to predict when the rally will end, traders miss the bulk of the move - especially during intermediate rallies when momentum can persist longer than expected.
Instead of trying to guess the top, Steve’s philosophy focuses on letting the structure turn first. That means using crossover signals and channel breaks, not news headlines or gut feelings. By following the structure, traders can ride the trend confidently until the evidence shifts. The reward is a more stable and consistent outcome.
How Intermediate Rallies Fit Into the Bigger Picture
Intermediate rallies often occur during market corrections or consolidations. They’re the “breathers” within larger bullish or bearish cycles. For traders and investors, these rallies present an ideal time to re-engage - not because they are a bottom, but because they are structurally confirmed moves that fit into the broader cycle.
Recognizing these rallies requires understanding how cycles behave. A cycle does not move in a straight line. It ebbs and flows, creating tension and release. Intermediate rallies are part of that release, offering participation without having to nail the absolute bottom. Steve teaches that spotting these moments depends on tracking crossover averages and respecting price channels, not media chatter or speculative forecasts.
The key is context. When you see an intermediate rally within a larger uptrend, it's often a sign of renewed strength. Within a downtrend, it may signal a temporary reprieve before another leg lower. Either way, these rallies are not random - they’re part of the natural rhythm of markets. Knowing how to identify and engage with them can greatly improve your timing and confidence.
Tools We Use to Confirm Structure
Rather than rely on common technical tools like Bollinger Bands or pivot points, we stick with what works: price channels, cycle timing, and moving average crossovers. These are not just indicators - they are structural guides that help us read the market's internal health.
Price channels help frame the boundaries of a trend. They show when price is expanding or contracting, and whether it respects or breaks key levels. A breakout from a defined channel often signals an intermediate rally with enough strength to ride.
Crossover signals, particularly the alignment of short and long-term moving averages, give confirmation that momentum is shifting in a meaningful way. When both price and averages confirm direction, we act. This combination of tools - applied with discipline - ensures we follow structure, not speculation. Check our post on Swing Trading Software: What to Use and What to Avoid for Discipline and Timing for more info.
The Discipline to Re-Enter After Being Shaken Out
One of the most psychologically challenging aspects of trading is re-entering after a drawdown or shakeout. You get stopped out or lose conviction, and the rally resumes without you. It’s tempting to either chase too late or stay out entirely due to frustration. Neither approach leads to success.
Re-entry must be approached with the same discipline as your initial entry. If structure turns back up - if price breaks resistance, crossovers re-align, and channels turn supportive - then the market is giving you another chance. The discipline lies in listening to structure, not ego.
The best traders are not the ones who never get shaken out - they are the ones who know when to come back in. Intermediate rallies are often that invitation. Recognizing them, without being clouded by past mistakes or emotion, is what separates reactive traders from strategic ones. Check our post on The Structure Remains Stock Market Bullish: Don’t Get Shaken Out for more info.
Sideways Markets and the Illusion of Strength
Sideways trading environments are breeding grounds for false confidence. A strong-looking move within a range can feel like the beginning of a breakout - only to reverse back into chop. Many traders confuse these brief bursts of strength for intermediate rallies, only to get trapped in noise.
That’s why structure matters so much. An intermediate rally is not just a sharp move upward - it is one that emerges with confirmation, alignment, and context. Without those, you may simply be chasing into resistance or overreacting to a short squeeze.
Understanding the difference is crucial. When price remains within a sideways range and crossovers are flat or indecisive, that’s not the time to push. Intermediate rallies will break structure decisively. Until then, patience is your edge. Check our post on Sideways Trading and the Danger of Chasing Strength Without Confirmation for more info.
What People Also Ask About Trend Following Strategies
What is a trend following strategy?
A trend following strategy is an investment or trading approach where decisions are based on the prevailing direction of the market. Instead of trying to predict tops or bottoms, trend followers aim to enter a trend after it has already established itself and exit when it shows signs of reversal. This strategy relies heavily on price action and momentum, making it ideal for catching intermediate rallies without needing to guess market extremes.
Trend followers typically use tools like moving average crossovers and price channels to identify the direction and strength of a trend. They focus on riding the wave rather than picking the start or end. This helps reduce noise and emotion, allowing decisions to be based on observable behavior rather than speculation.
How do I identify an intermediate rally?
An intermediate rally is identified by a combination of structural signals that confirm renewed upward momentum. These include price breaking above previous resistance, positive crossover signals on moving averages, and alignment within price channels. These rallies often occur within a broader uptrend or during pauses in a downtrend.
The key is to look for confirmation across multiple timeframes and to stay aware of broader cycles. Rather than jump in after one strong day, wait for sustained movement that reflects institutional accumulation. Patience in identifying these signals is crucial for effective trend following.
Why is guessing tops and bottoms risky?
Guessing tops and bottoms relies on prediction rather than evidence. Most market turns happen gradually, with warning signs emerging in structure before headlines catch up. Trying to anticipate these moments often leads to premature exits or mistimed entries.
Instead, it’s more effective to follow structure and react to clear signals. This approach reduces emotional decisions and improves consistency. Trend following accepts that you may miss the exact turning point but allows you to participate in the meat of the move with more confidence.
What role do price channels play in trend following?
Price channels provide a visual framework for understanding where the market is trending and how far it may extend. When price moves within a rising or falling channel, traders can assess the strength and direction of the trend. Breakouts or breakdowns from these channels often signal a shift in trend or the start of an intermediate rally.
In Steve’s strategy, price channels help traders remain objective. Rather than reacting to headlines or volatile candles, the focus is on whether price respects or breaks structure. This clarity makes it easier to stay aligned with the market’s rhythm.
How do I know when to re-enter a rally?
Re-entry requires the same discipline as your first entry. If you were shaken out during volatility, you must wait for the structure to realign before re-engaging. That means watching for price to recover key levels, moving averages to re-cross upward, and channels to shift direction.
Emotions can cloud your judgment after a loss, but trend following is about trusting the process. When the market confirms strength again through structure - not just price spikes - it’s time to get back in. Let the market invite you with evidence, not anxiety.
Resolution to the Problem
The core problem traders face during intermediate rallies is the emotional need to anticipate turning points. This often leads to early exits, missed entries, and confusion in sideways or volatile markets. Guessing tops can feel smart in the moment, but the long-term result is diminished returns and shaken confidence.
Steve’s approach eliminates this problem by replacing prediction with discipline. By tracking price channels, crossover signals, and cycle context, traders have a repeatable process to follow. You don’t need to know the news, the reason, or the exact timing - you just need to know what structure is telling you. That’s where the clarity begins.
By focusing on the evidence and staying within the boundaries of structure, you gain consistency. The solution isn’t trying harder to guess correctly - it’s learning to read the market’s rhythm. That shift in mindset makes all the difference.
Join Market Turning Points
If this approach resonates with you, you’re not alone. Thousands of disciplined traders have joined Market Turning Points to simplify their decisions and ride the markets with confidence. We teach traders how to follow structure, use price channels, and stay aligned with key market cycles.
You don’t need to learn a thousand indicators or memorize market patterns. Our system is built for clarity. Whether you're navigating an intermediate rally or waiting for structure to turn, we help you stay focused and ready.
To start learning, join us today. You’ll get access to real-time insights, chart breakdowns, and a disciplined process that respects structure above all else.
Conclusion
Guessing market tops is a losing game - one that most traders play and eventually regret. The real opportunity lies in recognizing structure, respecting cycles, and riding intermediate rallies with clarity. That’s how you stay in sync with the market without chasing or fearing reversal.
Steve’s philosophy centers on disciplined action. It’s not about predicting headlines or jumping in and out with every swing. It’s about waiting for confirmation, acting with conviction, and letting structure lead. This approach removes guesswork and builds lasting confidence.
If you’re tired of chasing strength or sitting on the sidelines, it’s time to change how you engage with the market. Follow trend following strategies and let structure be your edge.
Author, Steve Swanson