Trend
Quick Answer
The general direction in which a market or asset's price is moving over time.
Types of Trends
Uptrend Price makes successively higher highs and higher lows. Each rally reaches a higher point than the previous one, and each pullback finds support at a higher level.
Downtrend Price makes successively lower highs and lower lows. Each rally fails at a lower point, and each decline reaches a new low.
Sideways/Range Price moves between defined support and resistance without establishing a clear direction.
Trend Timeframes
Primary Trend (Major) Lasts months to years. This is the main direction of the market.
Secondary Trend (Intermediate) Lasts weeks to months. These are corrections within the primary trend.
Minor Trend (Short-term) Lasts days to weeks. Day-to-day fluctuations within the secondary trend.
Always consider multiple timeframes. A stock might be in a short-term downtrend but a long-term uptrend.
Identifying Trends
Visual Analysis Look at the pattern of highs and lows on a chart.
Moving Averages Price above a rising MA suggests uptrend; below a falling MA suggests downtrend.
Trend Lines Connect swing lows in uptrends or swing highs in downtrends to draw trend lines.
ADX Indicator The Average Directional Index measures trend strength (not direction) on a scale of 0-100.