Uptrend and downtrend

An uptrend and a downtrend describe the two basic directions a stock's price can sustain over time, defined not by any single day's move but by a repeating pattern in the sequence of highs and lows the stock makes as it advances or declines. Recognizing which kind of trend a stock is in, or whether it is trending at all, is one of the most basic starting points in technical analysis, since many other tools and patterns are only meaningful once the underlying trend is understood.

An uptrend is defined by a series of higher highs and higher lows, meaning each rally carries the price above its previous peak, and each pullback stops above its previous trough. This pattern shows that buyers are consistently willing to step in at progressively higher prices, and that sellers are unable to push the stock back below its prior low. A downtrend is the mirror image, defined by a series of lower highs and lower lows, showing that sellers are consistently willing to accept progressively lower prices, and that buyers are unable to push the stock back above its prior high. A stock that is neither making consistently higher highs and lows nor consistently lower ones is generally considered to be trading sideways, or range bound, rather than trending in either direction.

Traders use the presence and direction of a trend to decide how to interpret other signals, a moving average crossover or a breakout above resistance carries more weight when it lines up with an established trend than when it fights against one. A trend is generally considered intact until it is broken, meaning an uptrend remains in force until the stock fails to make a new high or breaks below a prior low, which is why trend analysis tends to focus on identifying that break as early and reliably as possible rather than trying to predict a reversal in advance.