Defining Trend's Potential


Could the Dollar be turning the corner?
Could the Dollar be turning the corner?

Currencies throughout Asia have welcomed the news that the Dollar has tumbled to a near 3-month low. A number of different currencies in the region have advanced against the Greenbac...

Dollar bulls return: is the correction over?
Dollar bulls return: is the correction over?

After six consecutive days of decline, the dollar has finally attracted the bulls. The greenback’s recent drop may be viewed as a short-term correction led by President Trump&r...

Geopolitical tensions drive traders into safe havens
Geopolitical tensions drive traders into safe havens

The USD took a dive today as geopolitical risks increased on the back of Trumps announcement that he would not attend the summit with North Korea in Singapore. There had been specula...

Turkey rate increase unlikely to benefit Lira, Rand higher after FOMC statement
Turkey rate increase unlikely to benefit Lira, Rand higher after FOMC statement

The South African Rand is showing some indications of recovery against the US Dollar in the aftermath of the latest FOMC statement. The Rand is up by 0.5% at time of writing with the...

EURUSD: time for an upwards correction
EURUSD: time for an upwards correction

Previous: On Wednesday the 2nd of May, trading on the euro closed down. The single currency has shed 146 pips against the greenback over the May holidays to reach 1.1938. The pair we...

EURUSD: buyers trying to build on the upwards correction
EURUSD: buyers trying to build on the upwards correction

Previous: On Monday the 23rd of April, trading on the US dollar closed up. After weak manufacturing data from the Eurozone, as well as a rise in US10Y bond yields providing support t...

EURUSD: upwards correction overdue
EURUSD: upwards correction overdue

Previous: On Friday the 20th of April, trading on the EURUSD pair closed down. The single currency dropped against the dollar to 1.2293 during the European session, falling further t...

EURUSD: euro correcting yesterday’s drop
EURUSD: euro correcting yesterday’s drop

Previous: On Monday the 2nd of April, trading on the EURUSD pair closed down. The single currency rose during the European session to 1.2345. The main factor behind the dollar’...

EURUSD: markets ready to short the euro
EURUSD: markets ready to short the euro

Previous: On Thursday the 29th of March, trading on the EURUSD pair closed slightly down. The US dollar gained ground against the single currency as traders adjusted their open posit...

FxPro Forex Analysis: USDCAD and AUDUSD Analysis – March 29, 2018
FxPro Forex Analysis: USDCAD and AUDUSD Analysis – March 29, 2018

Canadian GDP will be released later today showing slight growth. The USDCAD pair has slipped into a sideways pattern below the area of the red trend line, shown here on the 4-hour ch...


The Trend Line Will Help to Create a Reliable Trading Strategy

Trend trading is a basis of most of strategies that are currently in use on the Forex market, so one of the sharpest questions nowadays is how to determine the trend, and specifically its direction at the selected time interval. To be fairly clued up of this issue it should be clear what the trend itself means and which factors does influence on its direction, as well as to understand some features of its move determination.

Purpose of the Trend Line

One of the simplest instruments in order to determine the trend's availability and its potential on the exchange market is the trend line. The trend lines will not only help you to determine the direction of the trend, but also to establish support and resistance levels. What is the purpose of the trend line? It shows you the last price movements, as well as instructs you regarding the future tendency of the market. Further, the trend line is a dynamic line of support in an uptrend and dynamic line of resistance in a downtrend. Average Directional Index (ADX) - is a popular technical indicator that is used to measure the direction and strength of the trend. Values ​​above 30 on the ADX indicate the strong trend, while the value below 20 indicates flat market or absence of the trend. The higher the ADX (above 30) value, the stronger trend is.

The Trend Line Formation

Defining trend’s potential that is the main tendency of the market within a specific period of time, is the first step of the technical analysis. As we mentioned above, the trend could be the uptrend one, the downtrend and the sideways.

The trend lines could be formed if you connect two or more of maximum and minimum prices. The trend lines are required in order to determine the trend’s tendency, its reversal, as well as the support lines and resistance price. Support lines are conducted through local minimum, but resistance lines through local maximum. 

The support line characterizes the level when buyers become stronger than sellers, but the resistance level vice-versa, when the sellers are at an advantage before the buyers.

The resistance and support lines define the price channels, within which the movement and fluctuation of the current trend price occurs. 

When trading within the channel, the financial instruments should be bought at the local minimum, sold at the maximum, but in case of forecast appearance that the price will leave the channel limits, the player should do the opposite.

If the price crosses the line of the channel and extends for more than half of its current range, it means a signal for the forthcoming trend reversal.

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