TRENDS &

TRENDLINES
 Types Of Trend
Uptrend: An uptrend is characterized by a series of higher highs and higher lows. In this
trend, the price of an asset or market steadily rises over time. Buyers are in control, and
there is an overall positive sentiment. Traders and investors look for opportunities to buy
in an uptrend, expecting further price appreciation.

Downtrend: A downtrend is characterized by a series of lower highs and lower lows. In

this trend, the price of an asset or market steadily declines over time. Sellers dominate
the market, and there is an overall negative sentiment. Traders and investors may seek
opportunities to short or avoid entering long positions in a downtrend.

Sideways or Horizontal Trend: In a sideways or horizontal trend, the price moves within
a relatively narrow range without a clear and sustained upward or downward
direction. The market lacks a strong trend, and prices tend to consolidate. Traders
might use range-bound strategies, such as buying near support levels and
selling near resistance levels.
 Higher Highs And Higher Lows
Higher Highs: when the highest during a
specific period is greater than the highest
price reached during a previous period. It
means the line goes up, comes down a bit,
then goes even higher.

Higher Lows: when the lowest price during a

specific period is higher than the lowest
price reached during a previous period. The
line doesn't drop as low as it did before
when it comes down.
 Lower Highs And Lower Lows
Lower Highs: when the lowest price during a
period is lower than the highest price reached
during the period. The line goes down, comes
up a bit and then goes down again.

Lower Lows: when the lowest price during a

period is lower than the lowest price reached
during the period. When the line goes down, it
goes even lower than it did previously
 Break Of Structure (BoS)
BoS- A break of structure occurs when price breaks a previous higher high for an
ongoing uptrend or when price breaks a previous lower low for an ongoing
downtrend.

Change Of Character (CHoCH)

CHoCH- In an uptrend, a CHOCH occurs when price after putting in a new
higher high, still breaks the previous higher low. It signifies a change in trend
and change in direction of the market.
 Categories Of Trends
Trendlines can be categorized into three main types: Major, Secondary, and Near-Term
trendlines.

Major Trend: The Major Trend represents the primary and prevailing direction of an asset's
price movement over an extended period. It is the most significant and enduring trend among
the three categories. Major trends can last for months or even years. Investors and long-term
traders focus on the Major Trend to align their positions with the dominant market direction.

Secondary Trend: The Secondary Trend, also known as Intermediate Trend, complements the
Major Trend. It represents price movements within the broader context of the Major Trend.
These trends typically last for several weeks to a few months. Traders often use Secondary
Trends to capitalize on short-to-medium-term opportunities and identify potential market
corrections or countertrends.

Near-Term Trend: The Near-Term Trend reflects the short-term price direction in the market.
It represents the most recent and immediate price movements, often spanning a few
days to a couple of weeks. Near-Term Trends are valuable for short-term traders and
day traders seeking quick opportunities in the market.
In the image above points 1,2,3 and 4 show the major trend (primary
trend). Wave 2-3 represents a secondary trend within the major uptrend.
Each secondary wave is divides into near term trends. For example,
secondary wave 2-3 divides into minor wave A-B-C.
 Trendlines
These are the lines drawn by joining all the peaks or the troughs
together. It helps traders identify the direction of the prevailing trend.
A minimum of 3 touch points are needed to plot a trendline.
The uptrend trendline, arrived at by joining all the peaks together, is
indicative of the growth exhibited by the stock and also projects
potential growth in the future. The downtrend trendline, arrived at by
joining all the troughs together, helps gauge the risk associated with
the security.
How To Draw A Trendline?
Things To Remember When You Draw
A Trendline
● Trendlines need not just be a line, they can also be zones.
● Any trendline with touch points more than 3 is considered a
strong trendline. When there is a breakdown or breakout of
such a trendline, significant move can be expected.
● Trendlines drawn on longer time frames are more significant.
● Adjustments should be made regularly to keep up with the
latest trends
 Ideal Slope Of Trendlines
The ideal slope of a trendline is between 30° to 45. It is observed
that any trendline with a slope more than the ideal degrees are
more likely to experience a breakout. In simpler words, steep
trendlines are less likely to sustain.
 Trendlines Acting As Support And
Resistance
Trendlines can also serve as support or resistance levels. The buyers push the
prices above the support and the sellers push it below the resistance. This price
movement along the trendline also indicates the strength of bulls or bears.
 Area Of High Confluence
The area of high confluence, in the context of trading and technical analysis, refers to a
specific region on a price chart where multiple technical indicators, tools, or trading signals
align or converge. When several different factors coincide in a particular area, it creates a
zone of high confluence, which is considered significant by traders and analysts.

In such an area, the confluence of various factors strengthens the potential significance of
that zone as a critical level for making trading decisions. Traders often look for areas of high
confluence as they provide more robust and reliable signals compared to relying on a single
indicator or tool in isolation.

Examples of factors that can contribute to an area of high confluence include:

1. Support and Resistance Levels: When multiple support or resistance levels converge in
close proximity, it enhances the importance of that price zone.

2. Trendlines: When trendlines from different timeframes or drawing techniques

intersect in a specific price zone, it creates a high confluence area.