When the stock price moves in one clear up or down direction, it is a market trend. What is the trend? It is a market consensus, the mood of market participants. If the market goes up, then the trend is bullish, if down – it is bearish. Therefore, the market can be bullish or bearish.
The main trend chart for traders is, of course, the daily chart. At the same time, trends can be both huge and insignificant, depending on the selected timeframe on the chart. Short-term anti-trend pressure (movement against the main trend) necessarily fails. Statistics say that in 70% of cases the short-term movement against the main trend will be unsuccessful. Therefore, it is important for us to follow the main trend as much as possible. Market trends that control the price – it’s like a giant ocean liner. They are slow and they need time to gain speed. Such “liners” have the maximum impact on the price behavior on all timeframes. To determine such a trend on the daily chart, you will need to view from 3 to 6 months of the price history. At the same time, weekly or even monthly charts are often needed to determine the long-term trend.
The short-term trends go hand in hand with long-term ones, increasing the potential of possible profits and the risk/reward ratio. For short-term trends we will use from 1 to 3 months of history. Do not forget to study the situation on higher timeframes. For example, you have a 1-hour or 4-hour chart open. Be sure to open the daily chart and see how things are going there. Trends on the 1-and 4-hour charts should always be in harmony with the trend and price action setups on the daily chart.