Technical analysis strives to identify recurring patterns in order to predict future price movement.
A technical analyst is guided by the market itself and attempt to predict the future based on the past. He’s not interested in the factors underlying the prices’ behavior.
Identify the direction of the trend is one of the most important tools and tactical analysis, and enables us to know which direction we should trade in.
What is Trend first of all?
Trend is a combination of the waves create the market direction.
Trends do not move in a linear downwards or upwards direction.
Rather, they are hidden between the lines of the chart, requiring us to identify them on our own there are three possible directions of chart movement.
Up, down and sideways. We identify a trend using peaks and troughs.
An asset in an uptrend create a series of increasingly higher peaks and troughs.
An asset in a downtrend creates a series of increasingly lower troughs and peaks.
An asset in a ranging trend creates a series of peaks and troughs at price levels that are more or less identical.