Uptrend, downtrend and sideways trend: how to spot them

A trend is a sustained direction of price movement. In an uptrend, successive highs and lows are higher and higher; in a downtrend, lower and lower; and in a sideways trend (consolidation), price moves within a range with no clear direction. A trend depends on the chosen time frame: the same market can be bullish on the daily chart and bearish on the hourly one.

The popular saying “the trend is your friend” assumes trading in the direction of the trend, but trends end, and recognizing a reversal in real time is hard and often visible only after the fact. To assess a trend, people use the structure of highs and lows, trend lines and moving averages. Each of these tools can be misleading, especially in consolidation.