How does one confirm the presence of an uptrend or downtrend in markets?

You can tell if a market is going up or down by checking how prices change over time, just like you know if your toy car is moving forward or backward by watching where it goes.

Like a Staircase

Imagine you're climbing a staircase. If the steps keep getting higher, that means you're going up, and that's an uptrend. If the steps get lower, you're heading down, which is a downtrend.

In the market, each step is like a price change, if prices go up more often than they go down, it's like climbing stairs, and there’s an uptrend. If they go down more often, that means it's a downtrend.

Like a Roller Coaster

Now think of a roller coaster, sometimes you go up, sometimes you go down. But if the ride mostly goes up, even with some dips, it’s still going in an uptrend. If it mostly goes down, even with some ups, that's a downtrend.

By looking at prices over days, weeks, or months, people can figure out if the market is moving up, like a happy staircase, or down, like a sleepy slide.

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Examples

  1. A child draws a line on graph paper to see if the prices are going up or down.
  2. A baker tracks how many loaves are sold each day to guess if business is getting better or worse.
  3. A teacher uses a simple chart to show students that prices have been rising for several weeks.

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