Thu. Dec 8th, 2022

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What is a Trending Market?

2 min read

A price series that continues to repeatedly close either higher or lower (on average over an outlined number of periods) is claimed to be trending. An upward trending market is one which will fluctuate up and down but on the average tends to shut periodically higher. A downward trending market ends periodically lower regardless of interim moves. Securities in any asset class tend to point out trending behavior of some kind.

Trending markets drift higher or lower in ways that may or may not be explainable.

Even random markets trend, but all trending asset prices represent trading and investing opportunity.
Technical analysts study trends to spot when a trend may end or change.

Traders use various patterns and trend lines to spot trending market directions and trading signals for one security. A trending market are often classified intrinsically for either the short-, mid- or long-term. Several trading channels can be drawn to follow a security’s trend. Some of the foremost common trading channels include the following:

  • Ascending: In an ascending channel a security is showing a bullish trend. This is represented by two positive sloping trend lines drawn above a security’s peaks and troughs.
  • Descending: during a descending channel a security is showing a bearish trend. This is represented by two negative sloping lines drawn above and below the candlestick pattern.
  • Sideways: A security or market index can also be showing a sideways channel. This trend will be flat. In a sideways channel, two zero sloping trend lines are going to be drawn from a security’s peaks and troughs.

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