TRADING GLOSSARY

Trend: the direction of the market’s path

A trend is the general direction in which a market is moving. Identifying the trend is the most fundamental and important task in technical analysis. “The trend is your friend” is the oldest and most profitable piece of trading wisdom.

Types of trends

Uptrend: A series of higher highs and higher lows. Each peak is higher than the previous peak, and each pullback low is higher than the previous pullback low. Downtrend: A series of lower highs and lower lows. Sideways/ranging: Price oscillates between horizontal support and resistance without making directional progress.

Timeframe context

Trends exist on every timeframe. The daily chart might show an uptrend, while the 1-hour chart shows a counter-trend pullback. The primary trend on the higher timeframe dominates. Trading with the primary trend and using lower timeframe pullbacks for entries is a high-probability approach.

When trends end

Uptrends end when price fails to make a new higher high and subsequently breaks below the most recent higher low. Downtrends end with the opposite pattern. Warning signs include: divergence between price and momentum indicators, declining volume on trend-continuation moves, and increasing volatility as the trend approaches exhaustion.

AskTrade’s Technical Analysis Agent identifies the trend on multiple timeframes and flags trend changes for every asset analyzed.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

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AskTrade analyses are AI-generated and do not constitute financial advice.