Trend analysis
There is a very popular phrase that investors use in the financial market - “Trend is your friend”, so one can see the importance of identifying the market trend. Actually, this is one of the most basic yet essential concepts in chart analysis, in fact the concept itself is quite simple and easy to understand. In general, there are 3 major types of trend and they are:
Uptrend:
A series of higher highs (each successive peak/resistance must be higher than the preceding one) and a series of higher lows (each successive trough/support must be higher than the preceding one).
Downtrend:
A series of lower lows (each successive trough/support must be lower than the preceding one) and a series of lower highs (each successive peak/resistance must be lower than the preceding one).
Sideways
A sideways trend (aka horizontal trend) is in a certain period of time when price traveling between levels of support and resistance.
Uptrend:
A series of higher highs (each successive peak/resistance must be higher than the preceding one) and a series of higher lows (each successive trough/support must be higher than the preceding one).
Downtrend:
A series of lower lows (each successive trough/support must be lower than the preceding one) and a series of lower highs (each successive peak/resistance must be lower than the preceding one).
Sideways
A sideways trend (aka horizontal trend) is in a certain period of time when price traveling between levels of support and resistance.