Trend
A sustained directional move: higher highs and higher lows in an uptrend, or lower highs and lower lows in a downtrend.
In practice
An uptrend on the daily chart shows higher highs and higher lows. Traders often wait for a pullback towards a prior low or a moving average before buying.
Common mistake
Calling the end of a trend too early. Strong trends can stay overbought for weeks.
Related terms
Moving average
The average price over a set number of periods, plotted as a line…
Support
A price area where buying has previously stopped a decline. Once…
Average Directional Index (ADX)
An indicator of trend strength, not direction. Readings above…
Candlestick
A chart bar showing the open, high, low and close for a period.…
Flag pattern
A short, tight counter-trend channel after a sharp move. It is…
Ichimoku Cloud
A Japanese indicator system that shows trend, momentum and support…