Trend

beginner

7 min read

Updated 2026-07-13

Reviewed by SST Editorial

A Trend is the prevailing direction of price movement over a given period of time. An uptrend is structurally defined by a sequence of higher highs and higher lows. A downtrend is defined by lower highs and lower lows. A sideways (or flat) trend occurs when highs and lows are contained within a horizontal range, representing balance between supply and demand.

Key Takeaways

01.Uptrend structure: Higher Highs (HH) and Higher Lows (HL).
02.Downtrend structure: Lower Highs (LH) and Lower Lows (LL).
03.Trends can exist simultaneously across different timeframes (e.g. daily uptrend within a weekly downtrend).
04.Trend lines are drawn along rising lows (uptrend) or falling highs (downtrend) to outline the slope.

Why it matters

Trading in the direction of the dominant trend increases the probability of success. It is the basis for the popular market adage: 'The trend is your friend.' Knowing the trend prevents traders from fighting macro momentum and helps them identify exit points when the structure breaks.

When it matters

It is relevant across all liquid markets to determine whether to buy (bullish trend), short (bearish trend), or sit in cash (sideways market).

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Visual Reference: diagram

Price moving in a zig-zag upward slope with rising troughs connected by an upward-sloping trendline.

Interactive Tool: terminal-embed

Draw an uptrend line connecting the lows on the chart to monitor the integrity of the trend.

Common Mistakes

Confusing timeframes

A stock can be in a daily downtrend (short-term pullback) while remaining in a strong weekly uptrend (long-term bull market). Failing to specify your trading timeframe leads to conflicting and poorly executed trade decisions.

📖 Real-World Example: Trend structure break

A major retail stock rose from $50 to $120 over a year, consistently printing higher highs and higher lows. At $120, it pulled back to $105, rebounded weakly to a lower high of $115, and then crashed below the $105 low to print a lower low. This structural break confirmed the end of the uptrend and beginning of a downtrend.

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