In Forex that is called simply trend line . It is one of the most important tools in technical analysis. It is the first tool in financial analysis in Forex currency trading market.
So, we should best known it and how can we benefit from this tool in making profits in Forex.
There are two types of trend.
Up Trend is escalating tops and bottoms. It is drawn from the lower points in an escalating direction. It is helps as a support from where you can purchase once the trend is not broken. If it is broken, this works as a resistance line from where you can sell when the price returns for retesting.
The down is a descending tops and bottoms. It is drawn from the highest points in a descending direction. It is works as a resistance from where you can sell once it is not broken. But, if it is broken, it works as a support line from where you can purchase when the price returns for retesting.
Another example that shows the difference between up and down
As shown in the previous diagram, it has three fulcrums.
There are condition for drawing , as the following:
- It starts at least from three strong fulcrums.
- It is not right the third fulcrum to be beside the price.
- It is not right to be very steep angle or too obtuse.
- It is not right to be on minute badge.
- It is not right to draw a trend with an infiltrated fulcrum.
- The more is trend period, the more is our confidence in it.
- The more is trend rebound, the more is our confidence in it.
An example of true one on badges, and the used tool in it.
An example of one up, It is the blue color; the other lines are for illustration.
An example of down trend
If you know how to draw a true one, this means that you achieve 90% in Forex education and trading.
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