The general direction in which a security's price is moving over time — uptrend (higher highs and higher lows), downtrend (lower highs and lower lows), or sideways.
A trend is the dominant direction of price movement over a period. An uptrend is defined by a series of higher highs and higher lows — each rally reaches a new peak, and each pullback finds Support above the previous low. A downtrend shows lower highs and lower lows — each bounce fails at a lower level, and each decline breaks below the prior floor. A sideways trend (range) shows neither pattern.
"The trend is your friend" is perhaps the most cited trading maxim, and for good reason. Trading in the direction of the prevailing trend dramatically improves your odds. Buying during an uptrend (buying dips near support within the trend) and selling during a downtrend (selling rallies near Resistance) aligns you with the dominant market force rather than fighting it.
Trends exist on multiple timeframes simultaneously, and they can conflict. A stock might be in a long-term uptrend (monthly chart), a medium-term downtrend (weekly chart), and a short-term uptrend (daily chart). Traders resolve this by identifying the trend on the timeframe relevant to their trading style — swing traders focus on the daily/weekly trend, while intraday traders care about the 15-minute/hourly trend.
Tools for identifying trends include trendlines (connecting higher lows in an uptrend or lower highs in a downtrend), moving averages (stock above its 200-DMA is generally in an uptrend), and the ADX indicator (which measures trend strength regardless of direction). In Indian markets, the Nifty 50 above its 200-DMA is widely considered a bullish regime; below it, bearish.
Trend changes are the most important signals in Technical Analysis. When a stock in an uptrend makes its first lower low, it is a warning that the trend may be ending. Confirmation comes when it also makes a lower high. These trend change points offer high-risk-reward opportunities — early trend-change entries have the best Risk-Reward Ratio if correct, but the highest failure rate. Most traders wait for confirmation (at the cost of a later entry) to improve reliability.
India Context
Nifty above 200-DMA widely considered bullish regime. Trend analysis is the foundation of most Indian traders' decision frameworks. Sector rotation creates sub-trends within the broader market trend.