The purpose of charting prices is to identify price trends as they begin to develop and to make trading decisions based on that trend. Another way of identifying price trends is by looking at past price movement. By taking the study of human psychology into account, certain patterns have been identified over the years and it is assumed that these patterns will continue into the future.
On a chart, prices are reflected in a series of peaks and valleys. The direction of these peaks and valleys make up the price trend. An upward trend would have a series of successively higher peaks and valleys. A downward trend would have a series of successively lower peaks and valleys. A sideways trend would have a series of successively level peaks and valleys.
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✔UPTRENDπ
When the price is in an upward trend, demand exceeds supply and we are in a bull trend, pushing prices higher. When the price is in a downward trend, supply exceeds demand and we are in a bear trend, pushing prices lower. When the price moves sideways, supply and demand are in balance.Uptrend is also the type of BULL MARKET (πclick)
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✔DOWNTREND π
Lower highs and lower lows made by stock are in a Downtrend. When the stock previous peak is higher than the current peak, it is termed as “Lower highs”. Similarly, when the current bottom is lower than the previous bottom it is termed as “Lower lows”.
Stock that are making lower highs and lower lows are in a downtrend. Lower highs mean the stock previous peak is higher than the current peak. Lower lows mean the current bottom is lower than the previous bottom.
Downtrend is also type of BEAR MARKET (πclick)
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