What are uptrends in trading?

    When the price of an asset or a security increases steadily over a period of time, it is said that the price is in an uptrend. The opposite of an uptrend is a downtrend. If the price is neither in an uptrend nor a downtrend, it is called a ranging market.

    Even if the market direction is clearly up, there will still be fluctuations in price. Thus, a general uptrend will also incorporate temporary decreases in price.

    This means that when the price of an asset moves in a particular direction, it does not move in a straight line. There may be small peaks and troughs: highs and lows within the trend. An uptrend can, therefore, be identified by continuously higher highs and higher lows.

    The chart below is an example of price in an uptrend:


    (1) Higher lows

    (2) Higher highs

    Further reading

    Many trading strategies are based on following trends. One example is our forex beginner strategy:

    To learn more about determining the market direction, continue here: