FOREX EDUCATION, The stages of a forex trend
What is a trend.
In Forex we can define a trend as an assets price action moving in a certain direction, up, down or ranging sideways, this shows the markets agenda for that specific asset, if price is trending up, we identify it with higher highs and higher lows as illustrated below, giving high probability buy setups, *Remember that price will remain in an uptrend as long as price does not break below the previous higher low.
In the picture below we have an illustration of a downtrend, identified by lower highs and lower lows, giving the trader higher probability sell setups.
*Remember that price remains in a downtrend as long as price does not break the most previous lower high.
Next we have an illustration of a ranging market, identified by equal highs and equal lows, also known as liquidity stacking and usually occurs after the market has been trending and before the market moves in the desired direction.
*Remember that price remains in a range as long as price remains within the equal highs and equal lows.
The above, all illustrate chart trends of specific assets, now lets briefly discuss a different kind of trend and outline how it reflects on the charts, this is known as the macro economic trend.
A macro economic trend refers to a countries economic trend or status, for example, recently South Africa has been through a series of dramatic events that shifted the overall economy into a downtrend, now what exactly this is not important for this article but you can find out more details on this on the WikiFX platform, what is important to focus on as a trader is how the macro economics affects the candlestick charts and what we can see based on the economic sentiment.
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