What is a Trend?

A trend is the general direction of a market or of the price of an asset, and trends can vary in length from short to intermediate, to long term. Short-term trends are generally considered to be those lasting less than a year, intermediate-term trends are those lasting one to three years, and long-term trends are those lasting more than three years. Trends can also be identified as secular (for long-term trends), primary (for medium-term trends), and secondary (for short-term trends).

Trends are often measured and identified by "trendlines." Trendlines are lines drawn on a chart to indicate the direction of the trend. Typically, trendlines are drawn below price in an uptrend and above price in a downtrend.

The trend is sometimes referred to as the "line of least resistance." For example, if a stock is trending higher, it would be expected to continue moving higher. If the trendline is broken, it might be a sign that the trend is changing.

How do you identify a Trend?

There are three main types of trends:

  • Uptrend
  • Downtrend
  • Sideways/Horizontal trend


An uptrend describes the price movement of a financial asset when the overall direction is upward. An uptrend is identified by higher highs and higher lows. A downtrend occurs when the price of an asset moves lower over a period of time. An uptrend is regarded as a bullish sign, while a downtrend is considered a bearish sign.


A downtrend describes the price movement of a financial asset when the overall direction is downward. A downtrend is identified by lower highs and lower lows. A downtrend is regarded

Sideways/Horizontal trend

A sideways trend is the horizontal price movement that occurs when the forces of supply and demand are nearly equal. A sideways trend is often regarded as a period of consolidation before the price continues in the direction of the previous trend.

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