Higher highs or lower lows:the trend is where the market goes.
The general direction of market price movement.
An uptrend consists of higher highs and higher lows; a downtrend consists of lower highs and lower lows; a sideways trend shows no clear direction.
In plain words
A trend is the general direction in which a price is moving. In an uptrend each peak and each dip tends to be higher than the one before; in a downtrend each tends to be lower. When neither is true the market is described as moving sideways.
See it move
Reached: Lower low
Why it matters
Many ways of reading a chart start by asking whether there is a trend and on what timescale, because the same market can be climbing over months and dropping over the past few hours. A trend is a description of the past and can end at any point.
Worked example
An example only. The figures are round and invented for the arithmetic: they are not market prices.
A pair’s successive turning points are a high of 1.1100, a low of 1.1040, a high of 1.1060 and a low of 1.0990.
- 1Second high against first1.1060 is 40 pips below 1.1100, a lower high.
- 2Second low against first1.0990 is 50 pips below 1.1040, a lower low.
- 3Lower highs together with lower lows fit the description of a downtrend.
On these four turning points the pair is in a downtrend.
A common mistake
A trend is not a straight line and not a promise. Prices in a trend still move against it for periods, and the sequence of highs and lows shows that a trend has ended only after the fact.
Check yourself
Learn more
- Academy lessonMoving averagesSimple and exponential moving averages, how each is calculated, what the golden cross and death cross describe, and how the period changes behaviour.
- ExplainerFibonacci extensions: how the levels are calculatedExtensions project a prior swing beyond its end using the same ratios as retracements. A worked EUR/USD example shows where each level comes from.
Educational information, not investment advice or a recommendation to trade.