Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Minor Uptrend

What it is:

A minor uptrend is a corrective movement in the market -- lasting less than three weeks – that goes against the direction of a secondary downtrend.

How it works (Example):

The minor trend is the last of the three trend types in Dow Theory -- the other two types are primary and secondary trends. Because minor uptrends (and minor trends, generally) exist over such a short time period, they don't redefine market movement. Due to this short-term nature, minor trends and minor uptrends are not considered a primary focus of Dow theorists.

Minor uptrends generally occur within the secondary downtrend, which typically lasts from one-third to two-thirds of the primary trend's movement. An example of a minor uptrend is interpreted in Figure 1 below:

Why it Matters:

When analyzing Dow Theory trends, it is a challenging task for investors to predict the length of minor uptrends, as they create considerable noise within primary uptrends and secondary downtrends. If investors get distracted by a minor uptrend, it can lead to irrational trading. 

Minor uptrends should be placed into the context of the overall secondary downtrend until all indicators and evidence suggests that the trend has reversed.

Read on to learn about Top Tools for Successful Technical Analysis.