The trend

The trend is an important concept in the field of technical analysis. The proponents of technical analysis means that you always should act in accordance with the current trend.

A trend is the direction in which the stock price is moving at the moment. The trend can be up, down or horizontal. The trend depends on the time that we refer to, the trend may be up for the time frame of one day but down for the time frame of a week. In technical analysis it is important to identify the trend but also to estimate how strong the trend is.

To identify the trend, you can use trend lines and moving averages. The strength of the trend can be measured by the ADX indicator. The trend is classified differently depending on the time that we refer to, the primary trend spans from several months to several years, the secondary trend spans from several weeks to several months, the tertiary trend spans from several days to several weeks and the subtertiary trend spans from several hours to several days.

Whether trends can exists and if it is possible to earn money to identify them is another matter. If no trends emerge, stock prices changes completely random and react only to new information. The whole stock market moves, however, always upward in the long term.