$BTC

Stock Price Behavior Analysis Course

Lesson 7: Definition and Structure of Price Trends (Part 1)

Candlestick patterns are details for observing market sentiment, but what really determines your profits is whether you trade in the direction of the trend. Today we start learning the basic concepts of "trends."

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What is a trend?

A trend is the directional change of price over a period of time. It is mainly divided into three types:

1. Uptrend

• Higher highs and higher lows.

• Indicates that buyers are in control, and one should focus on going long.

2. Downtrend

• Lower lows and lower highs.

• Sellers dominate the market, and one should consider shorting or avoiding.

3. Sideways/Range

• Price fluctuates within a range, with no clear direction.

• The market is in a tug-of-war between buyers and sellers, making it difficult to trade.

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Why are trends important?

"Trading with the trend" is the core principle of trading. Trading against the trend may yield quick profits but carries extremely high risks; whereas trading with the trend, though slower, is stable and replicable.