Twitter followers, after waking up in the morning tap the trending option in the twitter application. Little bit more analyzing the trends of the stock market are very important step for stock investors. The trend is being decided by the many factors like, world events, the economy, scandals related to stocks, company news, hype, politics, supply & demand, natural disasters, expectations & speculations and war & terrorism. The trend may be differ from stock exchange index to the certain stocks.
Analyzing trends is not an easy task, since the monthly stock’s uptrend constitutes the daily higher highs and higher lows of the stocks; like that downward trend includes the lower lows and lower highs. Researchers have gone to find the formula or charts for to find market trends and they have developed many more tools.
The graph indicates that the stock A which is having a downward trend, constitutes the daily lower lows and lower highs, similarly the stock B which is having an upward trend, constitutes the daily higher highs and higher lows. Using this simple chart would make investor to decide the daily trend of the certain stock.
Types of trends or trend line: in general, there are three types of trends; those are
– Downward trend (Stock A)
– Upward trend (Stock B)
– Stagnant trend (Stock C)
Downward trend: in the monthly chart of the stock indicates movement of the stock as downward direction, if we consider the daily movement of the stock it goes with different lower lows and lower highs. For the sake of example, we can consider the movement of stock A. Overall stock movement is downward direction, but the daily trend shows highs and lows.
Upward trend: in the monthly chart of the stock indicates the movement of the stock as upward direction, for the sake of example the stock B which shows the price of stock B in an upward direction, but technically includes daily higher highs and higher lows.
Stagnant trend: this is an unrealistic trend that indicates there are no buyers and seller of the stock. If we assume that there are buyers, they don’t want to sell them. If we assume there are sellers, they don’t want to sell them.
Trend length: trend length can be short term or long term. The change of price between the two points can use to determine the length of the trend. If we consider the price movement from the point U to V, shows that there is little movement compared to the same stock price change from the point X to Y. Simply it is used to determine the price variance between the different stock prices. Trend channel: A channel, or channel lines, is the addition of two parallel trend lines that act as strong areas of support and resistance. The upper trend line connects a series of highs, while the lower trend line connects a series of lows. The channel of the stock A is indicated in the blue lines in the above figure. It shows the volume of price variation of the stock. It can be used to compare the financial health of the different stocks.
Author: Editorial staff of 70trades reviews blog