Last week in Part 7, we looked at Market Breadth. We now start a chain of eight articles covering technical analysis directly carried out on price. We will be looking at patterns, support amp; resistance, trends, Fibonacci, pivots, moving averages, bands, indicators and Ichimoku. The first of the eight, looks at Trends, Support amp; Resistance. Understanding these principles will give you the necessary building blocks to understand price action and analysis and evolve your technical analysis learning.
The trend
From the previous articles in this series, we know how to build some of the basic and most popular chart types. We now need to know what the chart is trying to tell us. We start with direct price analysis. Remember one of the key founding pillars of technical analysis: ‘Prices move in trends’? This is where we start – what direction over a period of time is the price moving in? This can be categorised into 3 simple classes: Up, down or sideways. The trend is measured through the analyst’s subjectivity, based around some loose rules, by manually drawing trend lines onto charts.
So, what is a trend? Its official definition: The general direction of a market or of…
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