How To Identify Market Trends With Technical Analysis
The major rule of technical analysis states that prices move in trends. Even though stock price movements may appear random, this principle suggests that prices generally follow short-, medium-, and long-term trends.
The question is: how do you spot a trend? Let’s explore this further.
What are market trends?
We can define three major price trends: uptrends, downtrends, and sideways movements. When the market is indecisive, it typically trades sideways. When driven by positive market factors, an uptrend may form. Conversely, negative influences can lead to a downtrend as prices decline.
If you’re able to identify an emerging trend early, you may have the opportunity to enter the market in line with the prevailing direction.
