The Concept of Trends and How to Determine Forex Trends
Do you want to be a successful forex trader? Of course, if you’ve dropped in this article, at least your desire to learn about forex trading already in your mind. This article will discuss briefly and clearly on the concept of trends. When viewed in general, the trend is a movement of the market direction. But in addition we need a more accurate definition to be able to use it in a technical analysis.
The concept of trend is fundamental to doing market analysis with a technical analysis approach. All the tools used chartist such as support and resistance levels, price candle patterns, indicators, lines and more, all aim to help in measuring the trends that are happening in the market. You may often hear popular terms like “the trend is your friend”?
All you need to remember is a price movement in the form of a straight line in one direction. The market moves in fluctuations forming successive wave patterns, with peaks (tops) and clear (through) valleys. The direction of this peak and through which will determine a market trend that is happening. While Peak and Through is moving up, down, or sideways (sideways). The direction of movement is what will tell us about market trends.
To facilitate the trend is classified into three:
Uptrend or uptrend is an increasing market price movement (up). Technically, the uptrend can be identified from the upwardly moving graph, with the peak (P) and valley (L) row rates, where the position is higher than the previous peaks and valleys. We often refer to it as Higher High Higher Low (HHHL).
Downtrend or downtrend is the movement of declining market prices (down). Technically, the downtrend can be identified from a downwardly descending graph, and a series of peak (P) and valley (L) prices are lower than previous peaks and valleys. We often refer to it as Lower High Lower Low (LHLL).
Sideways or sideways are horizontal price movements within a certain range. This movement is not in up and down trend, neutral or consolidation. The distance between the peak and valley ranges is within a certain range (ranging).