The Forex Markets And Its Trend Patterns
As you start analyzing forex charts you will realize that themarket often display's some very familiar patterns of pricemovement. Once a pattern is established, it becomes the mostprobable course of future price action until the market changes.
There are two types of markets which will become very importantfor you to identify and understand; these are: trending andtrend-less markets. Each market type has two specific patternswhich you will also notice over time.
These market types and patterns are defined as follows:
Trending - Steady elongated price movements with less than a 45degree angel with occasional pauses, profit taking, or restingperiods.
In a Trending market, you have also other patterns:
- Uptrends - A pattern of higher highs and higher lows.
- Downtrends - A pattern of lower lows and lower highs.
Trend-less - Erratic price movements which are often steep (greater than 45 -degree angle ) and cannot sustain and thereforemust reverse. Although the movements can move many points
in ashort period of time, they often result in very little net pricemovement over time.
In a Trend-less market, you have these patterns:
- Choppy - An erratic pattern of higher highs and lower lows.
- Sideways - A narrow pattern of lower highs and higher lows.
While up-trend and down-trend days can offer excellent tradingresults, choppy markets often create stop outs, while sidewaysmarkets produce for little in either direction making them hardto trade and to make any profit during these periods.
Your trading objective is to get into a trending market and ridethe trend until you make your target profit objective.
There are many Trend Trading Strategies that you can find in anumber of sources listed in my website. You will learn how toidentify and draw your own channel trendlines, support andresistance lines, triangle patterns, chart key top and bottomformations, etc.
Remember, knowledge in the Forex markets is power, and more thanpower; money.
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