One of the reasons why traders enter the foreign exchange market is to follow the trend. Trend trading is suitable for all investor types as trends are formed across all time frames.
Even the scalpers (short-term traders who trade in small profits) will be embarrassed in a lower time frame. For revolving traders and investors, the trend provides an opportunity to increase existing positions by buying bargains or selling peaks.
The worse thing that traders or investors can do is the horizontal market. Even if the foreign exchange market is one of the most unstable markets, the currency pair will be different.
Some pairs have more ranges than others. It is well known that crosses (those pairs that do not have a dollar in their components) tend to spend more time than other major currency pairs.
For this reason, the trend is not that easy. Moreover, it is not common.
But when they are formed, they offer tremendous opportunities for the development of trading accounts. Especially when they are formed on a large time frame.
The trend is not a straight line. On the contrary, when a market trend occurs, it forms a series of lower lows and highs (downwards) or higher highs and higher lows (when the market is trending upwards).
Even the most powerful trend will have a callback, so understanding the above series is crucial. As long as the series is held, the trend will not stop, and cycling is the way to go.
But this is a technical analysis concept. The correction of the trend depends on changes in fundamentals. Whether it's economic news or news of a different nature; they test the trader's strategy. When some other traders use the callback to enter a new trade, some traders close out to book a profit.
Take AUDUSD as an example. Throughout 2018, it traded below a bearish trend of 0.81.
It continues to form a series of lows and lows, and as long as these conditions are established, the trend will continue.
The trend line or trend line connects to the lower high point in this way that defines the trend. Traders use it to project a channel so that they know when and where the low points will receive dynamic support.
Although the price did break the upper limit of the channel, it turned out that it did not affect this trend. For the trend to be broken, the price must break a series of lower highs, but it has not happened yet.
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