Price Action
Trend
The prevailing direction of price: higher highs and higher lows is an uptrend, lower highs and lower lows is a downtrend. A pattern's meaning depends entirely on the trend it appears in.
Also called: uptrend, downtrend
In practice
On the daily chart, GBP/USD prints a sequence of higher highs and higher lows for three months — an uptrend. A bullish engulfing candle within it is a continuation buy; the identical candle during a downtrend, against the sequence of lower highs, is far more likely to fail.
Why it matters for traders
Trend is the single most important context for any signal, because the same candle means opposite things depending on it. 'The trend is your friend' is shorthand for a statistical truth: trading with the established direction stacks the odds in your favour, while fighting it is the most common beginner mistake.
Common pitfall
The error is fighting the trend — shorting an uptrend because it 'looks overextended,' or buying a downtrend because it 'feels cheap.' Trend persistence is real and powerful; countertrend trades need exceptional confluence to justify them. The first question on any setup should be the trend on your execution timeframe and one higher. Trading with the prevailing direction stacks probability in your favour; trading against it is the most reliable way to lose.
Lessons that use this term
- Trend basics
Uptrend, downtrend and range — and how to read structure from highs and lows.
- Moving averages (SMA and EMA)
The first indicator worth adding: trend direction, dynamic support and resistance, and how crossovers work.
- RSI, MACD and Bollinger Bands
Three more beginner-friendly indicators: momentum, trend changes, and volatility — with how to read each one.
Related terms
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