Horizontal trend breaking upwards

A break upward through a horizontal trend signals a positive change in investor psychology and is a buy signal.

Horizontal trends indicate that the investor base is balanced over time. When the price breaks upwards, it signals increased buy interest – there is now a majority of buyers in the stock. This is often a result of fundamental news. Especially if the break upward happens on increasing volume, it signals the start of a rising trend and thereby continued rise in the long term.

A break upward through a horizontal trend is a stronger signal if the price also breaks over the tops that define the trend ceiling. If this is not the case, there will still be resistance at these tops, and the price can more easily fall back again.