Identify forex trends is one of the most important analytical skills in trading. Not only technical traders, but those with fundamental principles also use forex trends as a basis for analysis to determine trading entry. However, learning how to spot forex trends is not as simple as it seems.
If you want signal accuracy to predict the next price direction, then there are advanced methods of learning how to spot forex trends that you need to know. This method can usually be learned from the best forex broker.
In general, forex trends can be identified by High and Low prices. For those of you beginners who are just learning how to identify forex trends accurately, the term High refers to the peak of a price wave, while Low is the valley or bottom.
So if there are at least 3 highs and lows that move higher, the price can be declared in an uptrend. Meanwhile, if there are at least 3 highs and lows that are moving downward successively, it is moving in a downtrend.
What if the Highs and Lows don't move up or down significantly? See first how the movement pattern. If High and Low tend to visit the same area repeatedly, it means that the price is trapped in a sideways condition.
Learn How to Identify Forex Trends with Momentum
The key to completing forex trend analysis to get directions for entry is in reading the momentum or trend strength. If the momentum is still high, then the price is allegedly still strong to continue the previous trend. However, if the momentum starts to weaken, then it will most likely enter a sideways condition or instead immediately reverse to another trend.
For example, you are currently identifying 4 High and Low prices that are continuing to rise. That is, the price is in an uptrend. If the momentum is still strong, then it will continue to rise to continue its bullish movement. You can also prepare to install an open buy.
However, if the momentum reads down, then you should not open buy first, because the uptrend in prices is likely to end. You can wait and see first to anticipate sideways movement, or instead use pending orders in the sell direction if you encounter a possible downtrend.
Recognizes Price Momentum with Accuracy
Currently, many oscillator indicators can help you identify price momentum accurately. But actually, momentum can also be seen from price action or patterns on the chart. 3 ways can be applied, including:
1. Changes in High Low Position
When a trend is going fast, the ideal High and Low conditions are to continue moving in a steady direction. If it is an uptrend, the High Low should continue to increase, and vice versa if the price is in a downtrend.
2. Distance Between High Low
You can also glance at the High Low distance to learn how to identify forex trends and its momentum. In an uptrend, all you need to look at is the distance between the Low only, because it indicates the frequency of price testing from the trend line support. If the distance is even tighter, it could signal a weakening of momentum.
3. The occurrence of the two conditions above (Price Clustering)
Changes in position and the approaching distance of High Low sometimes do not happen separately. Prices often do both things simultaneously, when buyers or sellers are not strong enough to continue the momentum from the initial trend.
As a trader who wants to be successful, besides learning about market trends, you also have to join a trusted broker like Didimax forex broker. On our platform, your transactions are guaranteed safe and you can learn beforehand to be successful in trading.
Apart from learning the right strategy, you also need to be a good market observer. Trading is not just guessing market possibilities, but you also need to be able to identify forex trends so you can make the right decisions.
