A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits

The Nature of Momentum

Everyone studying trends realizes that every trend has its own, distinct character. Some are fast and steep, lasting only a matter of days or weeks. These swing trends are the most common form of trend, so part of trend analysis is a requirement that momentum be identified without difficulty. In a short-term trend, movement into overbought or oversold is a valuable signal that it is a swing trend and not a new secondary or primary trend.

In the moment, it is a challenge to decide whether reversal is only a retraction to last a few sessions, a swing trend, reversal of a secondary trend, or the beginning of a new primary trend. A key to determining the nature of reversal is to track momentum along with price and volume signals. ...