As I have mentioned before, the stock market trend is everything in stock trading since the trend can tell us in which cycle the stock market currently. For your information, knowing the stock market cycles is a must if want to gain maximum profit from the market. I have discussed about three available stock market trend. However, I haven’t yet discussed in detail about how we can know the current stocks market trend exactly.
It is important to know the type of stocks market trend available but it is more important to know how to detect the current stock market trend. It is because – as mentioned before – by knowing the current trend, we know the current cycle, and then can make the right decision whether to buy or to sell the stocks. Therefore, this time, I will discuss in detail about how we can know the current stocks market trend.
To detect the current stocks market trend, there is a simplest way available which is by drawing it – by drawing the chart precisely. This stocks market trend detection is known as the trendline technique. In here, we draw a straight line between two or more point in stock market chart. By using this trendline drawing technique, we can know whether the current trend is uptrend (bullish), downtrend (bearish), or non trend (sideaway).
Stock Market Trend: Drawing The Uptrend Line
To draw the uptrend line, we need to connect (by using a straight line) two or more of the lowest price. It is kind like we connect the valleys that appear in the chart. Please be noted that the more the lowest price is connected, the more reliable the trendline. For better understanding about this uptrend line, let’s see the chart below:
As we can see, the blue line connects three lowest prices which have a higher price in forward. This blue line is called as the uptrend line. This uptrend line tells us that the market is currently in uptrend (bullish) as long as the line is not broken down by the chart.
Stock Market Trend: Draw The Downtrend Line
To draw the downtrend line, we need to connect (by using straight line) two or more of the highest price. It is kind like we connect the tops that appear in the chart. As like in the uptrend line, the more the highest price is connected, the more reliable the trendline. For better understanding about this downtrend line, let’s see the chart below:
As we can see, the blue line connects four highest prices which have lower price in forward. This blue line is called as downtrend line. This downtrend line tells us that the market is currently in downtrend (bearish) as long as the line is not broken up by the chart.
Stock Market Trend: Draw The Nontrend (sideways) Line
To Draw the nontrend line, we need to connect two or more point between the tops as well as the valley. So, in here, we need to draw two straight line to connect the high prices as well as to connect the low prices. The more the point is connected, the more reliable the trendline. For better understanding about this nontrend line, let’s see the chart below:
As we can see, there are two blue line – one connects the high prices (with the same level in forward) and other connects the low prices (with the same level in forward). This line is called as sideways line. This sideways line tells us that the market is move in the channel (straight movement) as long as the channel is not broken by the chart – either broken up or broken down.
Have a profitable stocks trading by utilizing the stock market trend everyone!