What are uptrends in trading?

When the price of an asset or a security increases steadily over a period of time, it is said that the price is in an uptrend. The opposite of an uptrend is a downtrend. If the price is neither in and uptrend nor a downtrend, it is called a ranging market.

Even if the market direction is clearly up, there will still be fluctuations in price. Thus, a general uptrend will also incorporate temporary decreases in price.

This means that when the price of an asset moves in a particular direction, it does not move in a straight line. There may be small peaks and troughs: highs and lows within the trend. An uptrend can therefore be identified by continuously higher highs and higher lows.

The chart below is an example of price in an uptrend:


number_1 Higher lows
number_2 Higher highs

Further reading

Many trading strategies are based on following trends. One example is our forex beginner strategy:

To learn more about determining the market direction, continue here:

How does a trader determine the direction of the market? Learn how to identify the market conditions to help you determine price movement.
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