Different kinds of trends
Introduction of Technical Analysis: Different kinds of trends
There are three different kinds of trends: sideways, downward, and upward trends. We will now go into greater depth about each of these trend categories.
Uptrend
An uptrend is a sequence of rising peaks and troughs wherein each peak is above its previous peak and each trough is above its previous trough. As long as this sequence of rising peaks and troughs continue, the uptrend is said to intact.Downtrend
A downtrend is a sequence of lower peaks and troughs wherein each trough goes below the previous trough and each peak falls short of the previous peak. As long as this sequence continues, the downtrend is intact.Sideways trend
A sideways trend is a pattern wherein there is no clearly identifiable trend and wherein prices move in a lateral band. As long as such sequence of uneven peaks and troughs continue, the sideways trend is said to be in effect.
There are only three types of trends: up, down, and sideways. Consequently, there is an equal chance that an asset will be in one of these three trends at any one time. This indicates that an asset has a one-third chance of being in an uptrend, a one-third chance of being in a downtrend, and a one-third chance of being in a sideways trend.
Additionally, other trends from various historical periods will be active at the same moment. For instance, an asset's major trend may be upward, its secondary trend may be downward, and its minor trend may be upward. Short-term traders would undoubtedly be impacted by a slight trend reversal from up to down, but long-term investors, who are primarily focused on the core trend's direction, are unlikely to be much impacted. Having said that, short-term traders need to monitor both the primary and secondary trends in addition to their greater interest in minor movements. Using the same reasoning, long-term investors should not disregard secondary and smaller trends only because they are more interested in the main trend.
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