In an uptrend, a stock rallies often with intermediate periods of consolidation or movement against the trend. In doing so, it draws a series of higher highs and higher lows on the stock chart. In a downtrend, a stock declines often with intermediate periods of consolidation or movement against the trend. In doing so, it draws a series of lower highs and lower lows on the stock chart. Rangebound price swings back and forth for long periods between easily seen upper and lower limits.
Trends tend to persist over time.
A stock in an uptrend will continue to rise until some change in value or conditions occurs. Declining stocks will continue to fall until some change in value or conditions occurs. Taking a position near a top or a bottom can be very profitable. For traders and investors, this wisdom teaches that you will have more success taking stock positions in the direction of the prevailing trend than against it. Volume Volume measures the participation of the crowd.