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Technical analysis

Trend

The prevailing direction of price over a chosen timeframe, described by the pattern of highs and lows.

An uptrend is a sequence of higher highs and higher lows; a downtrend is the reverse. When neither pattern holds, the market is ranging, and the strategies that work in a range are close to the opposite of those that work in a trend.

Trend is always relative to a timeframe, and the timeframes routinely disagree. A stock can be in a multi-year uptrend, a three-month downtrend and a two-day bounce at the same time, all correctly described. Stating the timeframe is most of the analysis.

Trends persist longer than most expect and end faster. That is why trend-following systems accept a low win rate: most trades are small losses in ranges, and the returns come from a minority of positions held through a sustained move.

Also known as: uptrend · downtrend · higher highs · range

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Educational definition. It is not investment advice and not a recommendation about any particular instrument.