How Do You Interpret Market Trends?

To read a market trend you need to first of all learn what's a trend and how you can spot a trend on a price chart.

First thing that you need to know about gold is that is the general direction of prices either upward or downward. The trend is the study & analysis of price movement upwards or downward.

Gold prices generally move within what is known as a trend. Gold price movement can either move in a downwards trend direction or an upwards trend direction.

To study trends - traders use trend-lines to show the general direction of the market trend.

A gold trend can be upwards -therefore traders will draw an upwards trend-line on the chart

A gold trend can be down ward -therefore traders will draw a downward trend-line on the chart

An upwards trend line is a diagonal sloping line that slopes upward thus its name - upwards trend line

An downwards trend line is a diagonal sloping line that slopes downward thus its name - downward trend line

Guidelines for Drawing a Trend-Line

To draw a trend-line - traders will need to follow the principles for plotting a trend line

At least two charts points are needed to draw a trend-line - when the third point touches trend-line without going through the trend-line then the trend-line is then considered as valid.

The direction of the trend line either upwards or downward will define the direction of the trend - the direction can either be upwards trend-line or downwards trend line.

Gold prices should move within this trend-line and prices should not go past the trendline. As long as price is within the trend line then market trend is still intact.

The prices should move along the direction of the market trend until such a time when the trend-line is broken. Once trend-line is broken then traders will analyze this as a possible trend reversal because prices aren't moving along the support zones or resistance levels provided by the trendline and thus this might mean that the trend is no longer holding.

Drawing an Upward Trend-Line

When the price moves up it forms higher highs and higher lows forming an upwards price movement. An upward trend line then can be drawn by connecting these price higher lows.

To draw this upward trend line - we use support areas. To draw the upward trend-line correctly 2 support levels are needed.

How Do I Analyze An Upward Trend Line - How Do You Analyze Chart Trends? - How Do You Interpret Price Trends?

Drawing a Downward Trend-Line

When it comes to learning how to draw and learning technical analysis of charts, you need to know that when price is moving it forms lower lows and lower highs forming a downward price direction. These are points that are used to draw the down ward trendline.

To draw this downwards trend - we use resistance levels and to draw a downwards trend correctly 2 resistances are needed.

How Do You Analyze Down-wards Trend Line

How Do I Analyze Market Trends? - How Do You Analyze Market Trends? - How Do You Analyze Chart Trends? - How Do I Interpret Price Trends?