Discover How To Identify the Trend & Improve your Forex Results

• Understanding price action trends in Forex helps keep trades on the right side of the market.

• Trends could be bearish or bullish:
  • Bearish trends: They have lower tops and lower bottoms on the chart.
  • Bullish trends: They have higher tops and higher bottoms on the chart.

• If a trend is not present on the chart, then we have a price range – a sideways price movement.

• Some ways to visualize a tendency on the chart is by using Swing High/Low Analysis, or the trend line indicator.

• The trend line is applied by simply connecting the tops, or the bottoms on the chart.

• When a Forex pair is trending it accounts for two types of movement:
  • Trend Impulses: These are the moves in the direction of the trend. They are attractive for trading.
  • Trend Corrections: These are the moves which lead the price back to the trend line. They are not as attractive for trading and it is not recommended to trade them if you are not an experienced trader.

• One way to confirm a trend is to identify the beginning of the third impulse related to the plotted trend line.

• Volumes are helpful for trend confirmation. Impulses usually happen during higher volumes, while corrections appear during lower volumes.

• One way to trade trends is by combining Trend lines, MACD and the Volume indicator.