Trends are an important aspect of trading and technical analysis. At any point in time, the market is either trending up, trending down, or ranging.
They form across multiple timeframes with one timeframe showing a trend while a smaller one could be showing an opposite trend.
Identifying trends can be done using the naked eye or by integrating technical analysis tools and studying charts. While it’s relatively easy to look at a chart and decide what the trend is, it’s a bit difficult to assume whether the trend is resuming or will reverse.
- Trends are always happening across different timeframes.
- Identifying trends is relatively easy but deciding whether the momentum will continue or not is difficult.
- Trends are a great addition to any strategy or plan as they help you filter opportunities further.