pranaytrades

TREND and its types

Education
NSE:TITAN   TITAN COMPANY LTD
The market never moves in a straight direction. It is characterized by so called zig-zag pattern. Depending on the direction of the market it can be labeled as "Trend of the market". A vast part of technical analysis is based on this trend analysis.

The market is usually classified into three different trends.

  • Uptrend
  • Downtrend
  • Sideway trend

1) An UPTREND is when the market makes a series of higher Peaks and Troughs.
2) A DOWNTREND is when the market makes a series of declining Peaks and Troughs.
3) A SIDEWAY-TREND or often called a Period of Consolidation is when the market is moving sideways (forming a channel). Price moves in a flat Horizontal pattern. This shows equilibrium. Supply and demand forces are on par with each other and nullify.

It is suggested not to trade in such a TRENDLESS market because most of the technical analysis tools that we use are based on calculations of trends. There is a high chance of a false signal getting generated in such a trendless market. Waiting for a break (and maybe retest of the channel S&R ) should be a wiser idea.

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