Market trend is the general direction that a market or security price is moving. The movement can be upwards (a bull run), downwards (a bear run) or sideways (rangebound). Market trends are a key part of technical analysis and help traders determine when a trade is worth taking, how to manage their risk and how to predict future price movements.
Whether you are a business owner or a trader, understanding the market trend can make or break your bottom line. By analyzing and staying on top of the latest market trend, businesses can prevent disruptions in their sales and operations and stay competitive and viable.
Trends come in all shapes and sizes, from cultural signals like the rise of quiet luxury to sudden spikes in demand for things like eco-friendly packaging. But when it comes to identifying market trends, it takes more than just a good instinct to know when something is real and worth paying attention to. Reliable consumer data over time, including cross-market comparisons, can identify key shifts in perception that might otherwise be missed.
Traders identify market trends using tools such as trendlines, indicators and candlestick patterns. They look for positive trends that can be confirmed with price action and technical indicators like RSI or MAs, as well as negative trends that can be identified through the opposite action — such as higher lows and lower highs — and indicators such as overbought and oversold levels.