Reading Markets · Trend and Structure
What a Trend Actually Is
What You'll Learn
- How a trend is defined, beyond just "price going up or down"
- The three basic categories a market can be in
- Why identifying the current trend is a foundational skill
The Big Idea
I want to teach you what a trend really is. It describes the general direction price has been moving over a meaningful stretch of time — not a single candle's move, but the broader pattern formed by many candles considered together, on whatever timeframe you are viewing, from the timeframes lesson earlier in this module.
Let's Break It Down
Markets are generally described as being in one of three basic states: an uptrend, broadly moving higher over time; a downtrend, broadly moving lower over time; or a range, moving broadly sideways, without a clear directional lean in either direction.
Here is something I want you to remember: a trend is not defined by any single candle. A single red candle inside an overall uptrend does not mean the uptrend has ended, the same way a single cloudy day does not mean a warm season has ended. It is the broader pattern across many candles that establishes what the current trend actually is.
Identifying the current trend, on whatever timeframe you are focused on, is a foundational first step before applying almost any other concept in this course. Support, resistance, breakouts and momentum, which I will cover in this and later lessons, are all typically interpreted in the context of whatever trend is currently in place.
Real Example
A trend is similar to describing a hiking trail as "generally uphill," even though it has small downhill dips along the way. Any single short stretch might go briefly downhill, but the trail's overall character, considered as a whole, is still accurately described as an uphill trend.
Why It Matters
Nearly every concept covered for the rest of this course — support and resistance, breakouts, pullbacks, momentum — gets interpreted relative to the prevailing trend. Being able to confidently answer "is this currently trending up, down, or ranging" is the first, foundational question this entire module builds from.
Common Mistake
A common mistake is judging the trend off only the most recent one or two candles, rather than the broader pattern. A couple of candles moving against the overall direction does not necessarily mean the broader trend has changed — that judgment requires looking at a wider stretch of price action.
Quick Check
What are the three basic states a market's trend is generally described as being in?
Key Takeaways
- A trend describes the broader directional pattern of price over a meaningful stretch, not a single candle.
- Markets are generally categorized as uptrending, downtrending, or ranging.
- Nearly every other market-reading concept is typically interpreted in the context of the current trend.
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