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Trend Identify

Trend from the neti

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Girish Nair
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57 views1 page

Trend Identify

Trend from the neti

Uploaded by

Girish Nair
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Trend Definition � What is a Trend?

By definition, atrend is the general direction


in which market values or the price of an asset evolve. Trends can be upwards
(bullish), downwards (bearish) or sideways (flat). There is no specific timeline
for a direction to be considered a trend, but overall, the longer the direction is
sustained, the more qualified the trend becomes.

Identifying a Trend
The easiest way to identify trends is by watching the raw price action of an asset.
Price action (technical) traders believe that the information provided by
candlesticks is sufficient to decipher the market. After all, they say �candles
exhaust themselves to give light to men�.

An uptrend is identified when an asset�s price is consistently making higher highs


and lows, while a downtrend occurs when the price is making lower lows and lower
highs. The trend is sideways or horizontal when the price oscillates between fixed
levels of support (the bottom-most border) and resistance (the upper).

Using Price Action to Identify a Trend


Trending markets (uptrends and downtrends) are ideal for swing traders who can set
wide price targets, whereas range-bound markets (sideways) are suitable for
scalpers and day traders who seek quick profits by setting short price targets. To
pick out optimal entry and exit points in a trend, price action traders use
trendlines and channels.

In an uptrend, a trendline is drawn from one particular swing low, connecting it to


another successive but higher swing low, and projecting the line into the future.
The line then acts as a dynamic support line, with optimal Buy position entry
points identified when the price touches or comes close to the trendline.

The reverse also applies on a downtrend, where a trendline is drawn from one
particular swing high, connecting it to another successive but lower swing high,
and projecting the line into the future. The trendline then acts as a dynamic
resistance line, with optimal Sell position entry points identified when the price
touches or comes close to the line.

In range-bound markets, the trendlines are drawn as horizontal lines along clearly
defined areas of support and resistance. Traders will then seek to place Buy orders
when the price is at or close to the support line and Sell orders when the price is
at or near the resistance line.

But not every trader loves their trading charts �raw�. There are other
�sophisticated� ways traders use to determine and trade trends in the market. Here
are some of the major technical analysis tools used in order to qualify trends:

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