✨What are the trends in technical analysis and what is its application in digital currencies such as Bitcoin and other cryptocurrencies? In the second part of the tutorial, we will look at the trends.
The concept of trends is definitely one of the principles of technical analysis. All the tools that we will teach in the following are created from patterns, oscillators, support and resistance levels, indicators, and with the aim of helping to measure the price trend. Even if you have been in the market for a short time, you must have heard the words, "Trend is your friend", "Always trade in the direction of the trend", "Never fight the trend". These are common phrases that you often hear in the market. So we need to take the time to define the process and know its types.
Bitcoin price chart consists of uptrends, downtrends and neutrals
John Murphy describes the trend in her valuable book, Technical Analysis of Financial Markets:
The market never moves in a straight line. Market changes are characterized by a series of zigzag movements. We call these market zigzag movements. The result of the motion of these waves is TREND.
✨Classification of trends in technical analysis
▪️ Uptrend
The uptrend is defined as a series of ascending waves. Charles Dow defines an uptrend as follows: "When a price is higher on an uptrend than the previous uptrend, or when the price is on a downtrend above the previous uptrend, we have an uptrend." In other words, the uptrend is a pattern of upward fluctuations.
An uptrend indicates a greater power of demand or purchase over supply or sales, referred to as the "BULLISH market".
The uptrend in technical analysis is the result of several uptrends
▪️downward trend
The downtrend is formed as a series of downward waves. Charles Dow described the downtrend as exactly the opposite of what was said about the uptrend. This means that whenever the price is lower in a bearish wave than the previous bearish wave or the price is lower in a bullish wave than in the previous bullish wave, we have a bearish trend.
A downtrend indicates a greater supply or demand power over demand or a buy, a "bearish market".
The downtrend in technical analysis is the result of several downtrends
▪️ Range trend
The Range trend consists of a wave or waves of ascending and descending that have a direct direction. In other words, if the price can not go above the peak of the uptrend or the price can not go below the bottom of the downtrend, we have a Range trend.
A Range trend indicates a relative balance between buyer and seller power or market supply and demand. "Range market" refers to this trend.
The Range trend in technical analysis is the result of several neutral waves
✨So far, we have defined the concept of trends in financial markets. We may be trending in the market but we need another tool to confirm our diagnosis, trading volume is the tool we need. According to Dow, trading volume is a secondary but important factor in confirming warnings derived from price analysis.
In general, keep in mind that trading volume should be in line with the direction of the main trend.
In the uptrend; Each ascending wave is accompanied by an increase in volume and each descending wave is accompanied by a decrease in volume.
Trading volume should confirm an uptrend
In a downward trend; Each descending wave is accompanied by an increase in volume and each ascending wave is accompanied by a decrease in volume.
If you have any questions, comment for me🔥🔥
The concept of trends is definitely one of the principles of technical analysis. All the tools that we will teach in the following are created from patterns, oscillators, support and resistance levels, indicators, and with the aim of helping to measure the price trend. Even if you have been in the market for a short time, you must have heard the words, "Trend is your friend", "Always trade in the direction of the trend", "Never fight the trend". These are common phrases that you often hear in the market. So we need to take the time to define the process and know its types.
John Murphy describes the trend in her valuable book, Technical Analysis of Financial Markets:
The market never moves in a straight line. Market changes are characterized by a series of zigzag movements. We call these market zigzag movements. The result of the motion of these waves is TREND.
✨Classification of trends in technical analysis
▪️ Uptrend
The uptrend is defined as a series of ascending waves. Charles Dow defines an uptrend as follows: "When a price is higher on an uptrend than the previous uptrend, or when the price is on a downtrend above the previous uptrend, we have an uptrend." In other words, the uptrend is a pattern of upward fluctuations.
An uptrend indicates a greater power of demand or purchase over supply or sales, referred to as the "BULLISH market".
▪️downward trend
The downtrend is formed as a series of downward waves. Charles Dow described the downtrend as exactly the opposite of what was said about the uptrend. This means that whenever the price is lower in a bearish wave than the previous bearish wave or the price is lower in a bullish wave than in the previous bullish wave, we have a bearish trend.
A downtrend indicates a greater supply or demand power over demand or a buy, a "bearish market".
▪️ Range trend
The Range trend consists of a wave or waves of ascending and descending that have a direct direction. In other words, if the price can not go above the peak of the uptrend or the price can not go below the bottom of the downtrend, we have a Range trend.
A Range trend indicates a relative balance between buyer and seller power or market supply and demand. "Range market" refers to this trend.
✨So far, we have defined the concept of trends in financial markets. We may be trending in the market but we need another tool to confirm our diagnosis, trading volume is the tool we need. According to Dow, trading volume is a secondary but important factor in confirming warnings derived from price analysis.
In general, keep in mind that trading volume should be in line with the direction of the main trend.
In the uptrend; Each ascending wave is accompanied by an increase in volume and each descending wave is accompanied by a decrease in volume.
In a downward trend; Each descending wave is accompanied by an increase in volume and each ascending wave is accompanied by a decrease in volume.
If you have any questions, comment for me🔥🔥