There are 3 directions in the stock market;
Up, Down, and Sideways.
- Q.How do you define an uptrend also referred to as Bullish?
A.Higher highs and higher lows create the zigzag path on a bullish chart.
- How do you define a downtrend also referred to as bearish?
A.Lower highs and lower lows create the zigzag path on a bearish chart.Q. How do you define a sideways movement?
A.Sideways movements are considered consolidations whether in a rectangle, channel (as in channeling stock), wedge, flag, pennant patterns, triangles, Bollinger band squeeze.
Welcome to the world of charting and technical analysis.
Did you know that a support line is more important in an uptrending (bullish) chart? Did you know that the resistance line is more important in a downtrending (bearish) chart? Now you do.
Retracements in a chart are where we see profit-taking and that creates the zigzag effect in a trend. How far a stock retraces determines when the chart trend is considered a retracement or a full reversal.
There are many technical indicators to determine retracements versus full-blown reversals.
1. Fibonacci Patterns
2. Bollinger Bands
3. Candle Patterns
It really depends on what time frames you are trading within to know which of these systems to use.
* Fibonacci retracement lines can be used on a daily chart or an intraday chart,
* Pivot Points are mostly used in intraday trading.
* Candle Patterns can be used on a daily chart or an intraday chart
How to use these systems effectively takes education and study. WealthBuildersHQ has this education for you whether you are a beginner or an experience trader. Join us online in our many classes.
Using technical chart analysis will help you determine the 3 directions of the stock market or any other financial market you desire to trade.