Technical analysis training; Trend – Section 4
Technical Analysis Training: Trend is the most important concept that you should be familiar with in technical analysis. The concept of trend, which is no different from the word itself, is in fact the result of the fear and greed of traders in the market. When traders are greedy in the market, prices go up, and when fear dominates the market, the market goes down. To get acquainted with the concept of trend, look at the following chart:
It is not difficult to see the upward trend of Bitcoin from September 2015 to March 2017 in this chart, but sometimes it is difficult to identify the trend:
As you can see, the chart has a lot of ups and downs, and it is difficult to discern where the price is heading.
Types of trends
It is usually not easy to identify trends because prices do not rise or fall in straight lines; The movement of the price in a trend is in the form of a wave and after each ups and downs, a decline occurs. We call an uptrend when it forms higher ceilings (Higher Highs) and higher peaks (Higher Lows).
We also consider the trend to be downtrend if it creates lower ceilings (Lower Highs) and lower floors (Lower Lows). The green and red lines in the image are trend lines that play the role of support and resistance. Trend lines determine the direction of movement and with their help you can be informed of the end of the trend and its change of direction. You will learn more about support and resistance lines in the following sections.
In terms of price movement, trends are divided into three categories: uptrends, downtrends and neutral trends (horizontal movements). As mentioned, we consider the trend to be upward when the slope is positive. The opposite is true of the downtrend. The neutral trend is the price movement in the horizontal direction and usually with the fluctuation between the resistance and support lines over time, no serious and strong movement is done in the downward or upward direction. Has been.
Technical analysis training; Trend – Section 4
Trends can be categorized in terms of length of time. Trends in this regard are divided into short-term, medium-term and long-term categories. Long-term trends over a period of several years, medium-term trends over a period of several months, and short-term trends over a shorter period (days to weeks) are displayed.
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Long-term trends are themselves a set of medium-term trends and medium-term trends are a set of short-term trends. This chart shows part of the long-term trend of Bitcoin from September 15, 2016 to July 15, 2017, which is a set of short-term and medium-term trends. It is important to note that we must use the appropriate timeframe to detect different trends in the chart.
Daily and weekly timeframes can be used to identify long-term trends, daily or 12-hour charts can be used to distinguish medium-term trends, and lower timeframes can be used to identify short-term trends. For example, it is not possible to detect a long-term trend with a one-hour timeframe in the chart.
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