What is Trend Analysis?

Trend analysis is a technique used in technical analysis that attempts to predict the future stock
price movements based on recently observed trend data. Trend analysis is based on the idea
that what has happened in the past gives traders an idea of what will happen in the future.

Trend :
A trend may be defined as “ the direction in which the majority of share prices move in the
market”
 Stock market prediction is based on two analysis:

Fundamental Analysis
 Types of trends
1. Upward Trend
2. Downward Trend
3. Sideways Trend
How to Use the Technical Analysis of Stocks and Trends

The core principle underlying technical analysis is that the market price reflects all available
information that could impact a market. As a result, there's no need to look at economic,
fundamental, or new developments .

Technical analysts generally believe that prices move in trends and history tends to repeat itself
when it comes to the market's overall psychology. The two major types of technical analysis are
chart patterns and technical (statistical) indicators.
 Chart Pattern

•A chart pattern is specific design on a stock chart, which gives an indication with regard to future
price movements.
•The shape created by a stock price action on its price chart forms the basis of technical analyst’s job.

Types of Chart Pattern

1. Reversal Patterns
2. Continuous Patterns
Reversal Patterns Continuous Patterns
 Limitations of trend analysis

Because trend analysis is based on historical data, both accuracy and reliability of such
forecasts suffer when the business environment changes .
For example- if a new competitor enters market, sales, revenue and profit may all decrease
unexpectedly and trend analysis based on past data will give forecasts that are too high.

Analysis of trend percentage is useless at the time of price-level change (i.e. in inflation).
Trends of data which are taken for comparison will present a misleading result
Thank You