Trend Lines

 

What is Market Trend?

Trend is simply the overall direction in which prices are moving-- UP, DOWN, OR FLAT.

What is Market Trend?

Types of Trends

The direction of the trend is absolutely essential to trading and analyzing the market. In the Foreign Exchange (FX) Market, it is possible to profit from both UP and Down movements, because the buying and selling of one currency is always linked to another currency e.g. BUY US Dollar SELL Japanese Yen.

Types of Trends

Up Trend

As the trend moves upwards the US Dollar is appreciating in value.

Types of Trends

Down Trend

As the trend moves downwards the US Dollar is depreciating in value.

Types of Trends

Sideways Trend

Prices are moving within a narrow range (The currencies are neither appreciating nor depreciating

 

 

Trend Classifications

Trend Classifications

Information About Trendlines

The basic trendline is one of the simplest technical tools employed by the trader, and is also one of the most valuable in any type of technical trading. For an up trendline to be drawn, there must be at least two low points in the graph, where the 2nd low point is higher than the first. A price low is the lowest price reached during a counter trend move.

Information About Trendlines
Information About Trendlines

Trend Analysis and Timing

Markets don't move straight up and down. The direction of any market at any given time is either Bullish (Up), Bearish (Down), or Neutral (Sideways). Within those trends, markets have countertrend (backing & filling) movements. In a general sense "Markets move in waves", and in order to make money, a trader must catch the wave at the right time.

Trend Analysis and Timing
Trend Analysis and Timing

Drawing Trendlines

Drawing Trendlines

Trendlines I

Drawing Trendlines will help to determine when a trend is changing

Trendlines I

Trendlines II

Trendlines show support boundaries under prices. These boundaries may be used as buying areas.

Trendlines II

Trendlines III

Temporary trendline penetrations are not as significant as a close beyond the trendline.

Trendlines III

Channel Lines

When prices remain within two parallel trendlines they form a Channel. When prices hit the bottom trendline this may be used as a buying area. Similarly, when prices hit the upper trendline this may be used as a selling area.

 

Channel Lines

Category: Technical Analysis Topics