What is Market Trend and Its Types
Market trend
A market trend is a putative tendency of a financial market to move in a particular direction over time. In technical analysis, when prices experience a series of higher highs and higher lows, they are said to be in an uptrend, which is often referred to as the bull market. In contrast, prices are said to be in a downtrend when they suffer through consistent lower highs and lower lows, known as the bear market.
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| What is Market Trends? |
What are Types of Market trends
These trends are classified as secular for long time frames, primary for medium time frames, and secondary lasting short times.
Generally traders identify market trends using various technical analysis, a framework which characterizes market trends as a predictable price response of the market at levels of price support and price resistance, varying over time.
Secular market trend
A secular market trend is a long-term trend that lasts 7 to 30 years and consists of a series of sequential primary trends. A secular bear market consists of smaller bull markets and larger bear markets and a secular bull market consists of larger bull markets and smaller bear markets.
In a secular bull market the prevailing trend is “bullish” or upward moving however in a secular bear market, the prevailing trend is “bearish” or downward moving.
Primary market trend
A primary trend has broad support throughout the entire market (most sectors) and lasts for a year or more. The bull and bear markets are also known as primary markets.
Bull market
A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows clear signs of recovery. It is a win-win situation for the investors.
Bear market
A bear market is a general decline in the stock market over a period of time. It is a transition from high investor optimism to widespread investor fear and pessimism. One generally accepted measure is a price decline of 20% or more over at least a two-month period.
Market bottom
A market bottom is a trend reversal, the end of a market downturn, and precedes the beginning of an upward moving trend (bull market).
Market top
Secondary market trend
Secondary trends are short-term changes in price direction within a primary trend. The duration is a few weeks or a few months. One type of secondary market trend is called a market correction.
How does a market trend work?
To know what market trend mean, it’s important to note what factors affecting the market trend and what are the conditions or situations which impact market trend. some basic factors are explained below:-
Government policies also impact Market trends
Government policies plays a vital role to drive market trends. By regulating fiscal and monetary policy, governments can slow down or accelerate the growth of financial market .Which in turn impact the market trend. For example, by regulating CRR and RR government control the liquidity of money which in turn regulate the financial market.
Market player sentiment also impact the Market Trends
Market trends can be shaped by the sentiment among market participants. When traders and investors have faith in the direction of a country’s economy and government. Their optimistic attitude can shape a bullish trend. On the contrary, a negative market sentiment among traders can push the asset’s price lower.
Supply and demand also impact Market Trends
The asset price tends to fluctuate on supply and demand. if supply of any asset is more price will decrease if demand of any asset is more then price will increase.
Corporate and economics news also impact the Market Trends
Results of companies also impact the Market trends. Positive results or news contribute to an uptrend. On the contrary, negative news could push prices lower, creating a downtrend
How to identify a market trend| Indicators to identify Market trends
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