Trend is a relative term that refers to a general trend in the fashion industry. A majority of the population holds a prevailing view as the trend. Generally what is in fashion tends to remain in fashion forever.
For instance, most people still like to wear black shoes whenever they go out on the road. The reason for this is because black symbolizes safety. Most traders also think that stock markets tend to move in an uptrends and downtrends. Uptrends in the stock market imply that prices go up and down in a predictable pattern. On the other hand, downtrends indicate the fall in prices.
Traders are always looking out for trendlines in the market because these provide them with the necessary information about the market. The main purpose of Trendlines in technical analysis is to show the direction and magnitude of a change in the price action. Trendlines are used by traders all over the world even those who do not consider themselves experts in trading.
There are several types of trend that a trader can analyze from the data. The best known type is the Bull Market trend where it is considered to be bullish when the prices cross the high or over the low of that particular time frame. Conversely, a bearish trend is considered to be negative when the prices cross the lower or below the high of that particular time frame. It is advisable for traders to analyze the trend in the Bull and Bear market segments separately. In order to make the analysis more accurate it is necessary to choose the longer range over the short range for the Bull and Bear market trends respectively.
Another popular trend is called the Uptrend. This is generally considered to be a bearish trend. However, the advantage of this kind of trend is that it occurs only for a short period during which the price usually bounces back before continuing its downtrend. It is advisable for traders to wait for the Uptrend to reach its resistance or support level and then to exit once the trend reverses.
Finally, another popular trend analysis method is to make use of the Time Series Trend Analysis. This involves the use of the moving averages in the time series data which can form trends. Traders can also make use of other indicators like the MACD and Stochastic Forecasting to determine the momentum of the trend. Traders also need to be aware of the fact that the trend analysis method may not give accurate signals as the market is dynamic and there are inherent factors that can affect the trends.
