How Do I Analyze Market Trends?

To read a stock index market trend you need to first of all learn what's a stock index trend and how you can identify a stock index trend on a stock index trading price chart.

First thing that you need to know about stock index is that is the general direction of stock index trading prices either upward or downward. The stock index trend is the study and analysis of stock index trading price movement upward or downward.

Stock Index trading prices generally move within what is known as a stock index trend. Stock Index price movement can either move in a downward trend direction or an upwards trend direction.

To study stock index trends - traders use stock index trend-lines to show the general direction of the trend.

A stock index trend can be upward -therefore stock index traders will draw an upward stock index trend line on the stock index chart

A stock index trend can be downward -therefore stock index traders will draw a downward stock index trend line on the stock index chart

An upwards stock index trend-line is a diagonal sloping line that slopes upwards thus its name - upwards stock index trend line

An downwards stock index trend-line is a diagonal sloping line that slopes downwards thus its name - downward stock index trend line

Guidelines for Drawing a Stock Index Trend Line

To draw a stock index trend line - traders will need to follow the principles for plotting a stock index trend line

At least 2 charts points are needed to draw a stock index trendline - when the third point touches the trendline without going through the trendline then the trendline is then considered as valid.

The direction of the trend line either upwards or downwards will define the direction of the trend - the direction can either be upwards stock index trend line or downwards stock index trend line.

Stock Index prices should move within this trend line & stock index trading prices should not go past the trend-line. As long as stock index trading price is within the trend-line then market trend is still intact.

The stock index trading prices should move along the direction of the trend until such a time when the trend line is broken. Once the trend line is broken then stock index traders will analyze this as a possible stock index trend reversal signal because stock index trading prices aren't moving along the support zones or resistance levels provided by the trend line & thus this might mean that the stock index trend is no longer holding.

Drawing an Upwards Stock Index Trend Line

When the stock index trading price moves up it forms higher highs & higher lows forming an upward stock index trading price movement. An upward stock index trend line can then be drawn by connecting these stock index trading price higher lows.

To draw this upwards trend line - we use support areas. To draw the upwards trend line correctly 2 support zones are needed.

How Do You Interpret An Upward Stock Index Trend Line - How Do You Analyze Stock Index Chart Trends? - How Do You Interpret Stock Index Price Trends?

Drawing a Downwards Stock Index Trend Line

When it comes to learning how to draw and learning stock index technical analysis of stock index charts, you need to know that when the price is moving it forms lower lows and lower highs forming a downward stock index trading price direction. These are points that are used to plot the downward stock index trendline.

To draw this downward trend - we use resistance levels and to draw a downward stock index trend correctly two resistances are needed.

How Do You Interpret a Downwards Stock Index Trend Line

How Do You Interpret Market Trends? - How Do I Analyze Stock Index Market Trends? - How Do I Analyze Stock Index Chart Trends? - How Do You Interpret Stock Index Price Trends?