Trend line is a straight line connecting two important price indicators on the graph. Forex analytics can take either minimal or maximal prices that will determine its direction at a given period of time. Currently there is no single opinion concerning that tool of technical analysis, since the lines of forex trend are built and explained by all the participants of the market in a different way.
Any forex strategy on trend lines must take into account the following indicators:
- Time – is the indicator that determines the behavior of the majority of market participants at a given interval. The longer the time span, the more reliable the line is.
- The angle of elevation determines the emotional state of players that are on the stock exchange at a certain period of time. If the line is gently sloping then the trend will be longer since the traders are inactive. In case the trend is abruptly ascending or descending, the situation is opposite since the dynamic players can change the prices.
- The deals volume demonstrate the moods of the market participants. One of the most important indicators of the change of the trend is exponentially growing number of participants and the volume of transactions made.
The main lines of Forex trend
Forex trend lines can be divided into the following types:
- Side trend. This trend line is at the same level and has practically no inclination, since the price change at that moment is minimal and is fluctuating within specific corridor. The change of maximal/minimal price indicators has not been spotted.
- The ascending trend. This line is also called the line of support. At this time span bulls are working actively on the currency exchange, they determine the movement of the price. The characteristic feature of this line is a constant growth of minimal prices.
- The descending trend. The trend line thus will have constantly descending indicators of maximum prices. With this trend work on Forex is determined by bulls that pull the prices down. The descending trend is also called a line of support.
Many beginning traders do not know how to build the trend line so that it allows getting correct data and it is possible to use it in your strategy. It is very easy to implement the building of trend line, you will need to put prices between two important price indicators, and after that one needs to check the correctness of chosen direction with new contiguity of prices and line. The more contacts happened the more secure this position will be.Social button for Joomla