How to identify a trend

We all keep hearing the "trend is your friend" or "follow the trend" etc but what is a trend?

A trend is the persistence of a stock to move in a particular direction (up or down) over extended periods of time. 

Since TA principles are independent of time, different trends can co-exist simultaneously over different time frames. For eg., it is common for weekly trend to up and daily trend to be down. Ditto for intraday charts.


A trend should always be treated as intact until there is a clear signal that the opposite trend has started.

Knowledge of a trend is important. This will help you trade on the winning side of the market and prevent you from taking decisions which run counter to the broader trend of the market.

Bullish trend

A bull trend is a series of higher highs and higher lows. The start of an up trend is signaled when price makes a higher low (trough), followed by a rally above the previous high (peak). The end is signaled formation of a lower high (peak), followed by a close below the previous low (trough). 

The peaks (HH) are also called as swing high and trough (HL) as swing low.

Bearish trend

A bear trend is a series of lower highs and lower lows. The start of a down trend is signaled when price makes a lower high (peak), followed by a break of the previous low (trough). The end is signaled formation of a higher low (trough), followed by a close above the previous high (peak). 

The LH is swing high and LL is swing low.

Example of trends

I have given examples using line charts... these are visually very easy to understand. For trading purposes, one should use a combination of line charts and candlesticks as the latter have the advantage of giving early signals.

The horizontal lines refer to applicable swing highs/ lows... these can be used as breakout levels or stoplosses.

Sample stock -5 min charts

Same stock - hourly charts

Same stock - daily charts