A trend is a general direction that an asset, market, or data set takes over time. Trends are often used by traders who employ technical analysis, relying on price action and other indicators to identify trends and warn when they’re reversing. Investors who use fundamental analysis look at trends in revenue, earnings, or other business and economic metrics.
Trend can mean different things, depending on the context: It could refer to a current fashion statement that’s “in” or out of style, or it could indicate an upward or downward direction in a stock market, based on economic indicators. It could also mean a fad or craze, like bike shorts or the latest celebrity obsession (which tend to come and go quickly).
A chart showing a rising trendline along with a rising RSI reading would indicate that the price is moving up. A drop below the trendline would be a sell signal, but only if it was accompanied by other indicators and price action, such as a lower prior swing low or a fading RSI reading.
The word trend is related to the notion of drift, with a tendency and tenor both suggesting movement in a certain direction over a winding or irregular course. It may be contrasted with momentum, which implies a more impelling force, and with continuity, implying a continuous or undeviating course. In some cases, a trend may be approximated by linear regression analysis, with the use of smoothing. However, these techniques can be used with nonlinear trends, as well. The examples on this page are programmatically compiled from online sources and do not represent the views of Merriam-Webster or its editors.
