Trend

A description of persistence in price. The oldest and most widely used identification comes from Dow theory: an upward trend is a sequence in which each significant high exceeds the last and each significant low sits above the last, and a downward trend is the mirror of it. What makes it a trend rather than a move is that both the advances and the pullbacks progress in the same direction, so the structure survives interruption.

Several other definitions coexist and they do not agree. Some identify a trend by the slope of a moving average or by the order in which averages of different lengths sit; some use a trend strength indicator against a conventionally cited threshold; some use the position of price relative to a channel. Each produces a different date for the beginning and the end of the same episode, and a market described as trending by one is frequently described as ranging by another, which is a real ambiguity in the term rather than a failure of any one method.

The difficulty that cannot be designed away is that a trend is named from the past and used as a statement about the present. Every definition needs completed swings, so it confirms a trend only after the movement that created it, and every trend in the record ended without announcing it. That, together with the frame problem, is why careful writing states the horizon and the definition being used, since the same instrument can be in an upward trend on a weekly chart and a downward one on an hourly chart with no contradiction at all.