#PriceTrendAnalysis

Using trend analysis is an important aspect of technical analysis, but it’s only one of many tools and techniques available

3 directions of trend

1. An uptrend is made up of ascending peaks and troughs. Higher highs and higher lows.

2. A downtrend is made up of descending peaks and troughs. Lower highs and lower lows.

3. A sideways trend (consolidation) is when prices move sideways in a horizontal range.

3 trend lengths

Charles Dow developed a series of principles for understanding and analyzing market behavior, which later became known as Dow Theory, the cornerstone of the study of technical analysis. Charles Dow believed that prices moved in waves or trends. He believed that much like a rising tide where the waves would move farther up the beach with each ebb and flow, and cause smaller ripples, so too would rising stock prices. Conversely, once the tide had peaked and changed to move farther down the beach until low tide, so too would stock prices. This may seem like a simple concept, but it is part of the foundation of the modern study of trends in stock prices.

Trend lengths:

Primary – Long-term (i.e., 1 year or longer): the tide in Dow's explanation

Secondary – Intermediate (i.e., 1 to 3 months): the waves

Minor – Short-term (i.e., less than 1 month): the ripples