A market trend is the perceived tendency of financial markets to move in a particular direction over time. Investors use market trend analysis to predict future prices, and to assess the risk of investing in a given security. Market trends can be long-term, upward, sideways, or downward. They may also follow seasonal patterns or other cyclical fluctuations.
When companies identify and understand market trends, they can shape those trends and take advantage of opportunities for growth. The right tools and repeatable processes for analyzing market trends can help businesses uncover new customer needs and insights to guide product development, marketing messaging, and strategic planning.
The ability to spot and act on market trends can put a business ahead of the competition. This can help companies develop innovative products that meet customer demands and stay competitive. It can also help them avoid wasting time and money on marketing strategies that don’t resonate with their audience.
A major benefit of conducting market trend analysis is that it can help you estimate future demand. Understanding historical consumer interest can help you plan for the launch of a new product or service, as well as determine how much to order from suppliers.
Minor trends usually last a few days or less, and are influenced by current news and trading volumes. They can be spotted using technical analysis tools like trend lines, which are straight lines that connect price points (highs and lows) and extend into the future.