Trend refers to the direction of a stock market or if the stock price. It can be vary from short to intermediate, to long term.
Bullish Market or Uptrend
When the stock price makes a move up then we would say that the stock is in uptrend and a vice versa when the stock price makes a move down then we call would say that the stock is in downtrend. However, the next move surpasses the previous high and again it corrects. The next move again surpasses the previous high.
If the market makes new highs – it’s like climbing steps; if you are blindfolded and every step you take is a higher step so you know that you are climbing upstairs that means a trend is up and you are blindfolded but your next step is lower and lower and lower, so that is the inverse.
Bearish Market or Downtrend
When the price of an asset or a security decreases steadily over a period of time, it is said that the price is in a downtrend.
This means that when the price of an asset moves in a particular direction, it does not move in a straight line. There may be small peaks and troughs: highs and lows within the trend. A downtrend can therefore be identified by continuously lower highs and lower lows.
So, the moment the market starts making newer lows you know that you are in a downtrend.
When we see at the bigger moves in the market they are all – one of the underlying principles is higher tops and higher bottoms and in an uptrend lower tops and lower bottoms in a downtrend and it is as simple as that.
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