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How to identify a trend or how to identify trends is in the very basis of technical analysis. Then once you learn how to identify a trend, you can start to delve into deeper and more advanced aspects of investing and trading. But let's first define 'trend' so as to better understand what we're dealing with.
A trend is basically just the tendency of data points to move in a specific direction on a trading chart. And while this definition is pretty straightforward, learning how to spot a trend is actually trickier than it sounds. Furthermore, as it so happens, technical analysts actually have a variety of different ways to do this and therefore also quite a few trend trading strategies.
For example, some experts tend to direct their attention towards the price action, while others may focus on specific technical indicators that were created especially for the purpose of recognizing trends. Essentially, you will notice that stocks hardly every move straight in a certain direction. Normally they go up and down, kind of like a staircase. Thus, stock charts create series of peaks and valleys (or highs and lows), which is what you can use to identify forex trends.
So, how to determine trend by high and low? Up (or high) trends can be spotted when you see a series of both higher highs and lows of a stock price. Similarly, if the price is making lower lows, as well as lower highs - then you're looking at a down trend.
Has our video helped you understand how to tell when the market is trending? Then please hit the 'Like' button and give us a thumbs up. For more trading content, subscribe to the Capital.com channel and always be up-to-date with the latest news in the industry, as well as useful tips and tricks to improve your investment game.
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