Trend

Ah, the trend – the most important thing that technical analysis traders want to look at. In our analysis that you just read, we wrote a long paragraph going through all kinds of trend indicators, some positive and some negative. The more positive numbers you see there, the more bullish the security can generally be thought to be (though that is very simplistic, of course). So let’s get to some of the definitions. We will not cover all of the trend indicators that we calculated in the article you read, and if you are interested in all the definitions, you can search for them yourself (many are covered on Wikipedia). But here are a few definitions for the most important indicators:

Moving Average Convergence Divergence: You may also know this as the MACD. This shows the relationship between two moving averages of a securities price. Here is an example of how it is used:

As per the above, it may be calculated by looking at the 12-period EMA and subtracting the 26-period EMA. You can see that the MACD briefly follows the actual chart of the security.

Ichimoku Kinko Hyo: This helps to improve the accuracy of price moves.

Aroon Indicator: This can help to identify the trend change in an asset, and the strength of the trend.

But beyond all of the complicated-looking trend indications that we wrote about, it’s also possible to just pay attention to the simplest indicators when it comes to trend. Suppose that a stock you are following makes an all-time high after having struggled to break its previous high for a long time. In that case, all the trend indicators will probably be telling you that that is a bullish indicator. Conversely, if a stock breaks its all-time low, that may easily be a very bearish signal.

When doing technical analysis, you will also often see that a stock tends to trade in a certain range for a long time (not necessarily just staying in its all-time range). Anytime a stock has been going up and down in a very tight range, when it breaks that for the upward or downward direction, you should be paying attention to it.

We strongly advise thinking about our analysis in detail and even trying to calculate the technical indicators yourself, as they will make you a much better technical analysis trader. You can also reach out to us if you would like to know more about our pricess.