To identify and shape market trends, traders can use various methods and approaches!

1. Direction. This property depends on the timeframe: the larger the timeframe, the less clearly the direction of the price movement is manifested. It is important to be able to distinguish between price correction and price movement. In case of the former, after some time, the price will return to its value and continue its movement within the corridor.

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3. Strength. The trend movement’s strength is defined by the slope of the price curve in the chart. Price spikes or steep moves are usually not very powerful, since they are short-lived. A strong and influential price movement is a consistent update of highs or lows (the slope of the price curve is approximately 45 degrees) lasting for quite a while.

4. Duration. As you can guess, the trend movement is the more stable, the larger the timeframe on which it manifests itself. The duration allows the trader to evaluate its strength and reliability.

5. Analyzing Market Trends

   To identify stock market trends, traders can use various methods and approaches:

   • Fundamental analysis. That means looking at the stocks’ or their issuer’s performance in general. It allows investors to see a bigger picture of the market. For example, a trader can notice an upward movement when 1) global companies repeatedly display positive results in its financial statements; 2) economic news shows that the industry keeps evolving, interest rates, monetary policy of the country, etc.; 3) the global or local economy is on the rise together with the price of securities.

   • Technical analysis. In this case, various tools are used — they are called ‘trend analysis indicators’. The most popular and widely used one is moving averages (MA). They reflect both price change direction and the trend’s strength.

   • Volume analysis. With a developing trend, an increase in prices is accompanied by stable volumes or their smooth growth. A significant drop in volumes or, conversely, an unpredictable peak can be regarded as a signal of the trend finish. When the share price is moving in another direction and the volume starts growing, that means a possible reversal or correction of the trend.

   One more approach worth mentioning is graphical market trend analysis, which can be regarded as a part of technical research. The most popular visual tool is a trend line. As long as prices stay above it in an upward direction or below it in a downward direction, the trend continuation is manifested.