Trends

The Basic Concepts of Trend

Trend is simply the direction of the market in which it is moving. A market can either move upwards, downwards or sideways. Markets don't move in a straight line. They move in waves. The direction of these waves determine the trend.

Uptrend

It is clearly seen in the following diagram that the price is moving in a series of waves & the overall direction of these waves is upwards. The high created by a wave is higher than the high created by its previous wave. So, an uptrend can be defined as a series of waves forming higher highs & higher lows.

Downtrend

It is clearly seen in the following diagram that the price is moving in a series of waves & the overall direction of these waves is downwards. The high created by a wave is lower than the high created by its previous wave. So, an uptrend can be defined as a series of waves lower highs & lower lows.

Sideways