Updated on March 13, 2023
A trend refers to the direction in which the price or the volume of a stock or other financial instrument is moving over a certain period of time. Traders can identify trends by analyzing the price and volume data of security. Trends can provide valuable information to traders and investors about the market’s direction and future potential price movement.
What are the key types of trends in markets?
There are three main types of trends in technical analysis:
An upward trend is characterized by higher highs and higher lows. It indicates that the asset, or stock or financial instrument is in a bullish phase and likely to continue moving higher.
A downward trend is characterized by lower highs and lower lows. It indicates that the asset or stock or financial instrument is in a bearish phase and likely to continue moving lower.
A sideways trend is characterized by a lack of clear direction. It indicates that the asset or the stock or financial instrument is in a range-bound phase and is likely to move within a defined range.