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When prices move in one direction for an extended length of time, we call that a trend. If that direction reflects increasing prices, we call it an uptrend. You would see this on a chart as in Figure 12.11 as a succession of generally higher highs and higher lows. Demand is increasing, which means that the buyers are controlling the price movement. |
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Figure 12.11
Uptrend Chart
Copyright 2000, TradeCast® Ltd. |
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If the price direction reflects declining prices, we call it a downtrend. On the chart in Figure 12.12 this would appear to be a succession of generally lower highs and lower lows. Supply is increasing, which means that the sellers are controlling the price movement. |
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If the rate of change is relatively neutral, we call it a flat trend, or a range bound trend. Supply and demand are in balance, as shown in Figure 12.13. Neither the buyers nor the sellers are asserting themselves. |
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