How Do You Read Market Trends?

How Do You Read Forex Price Trends?

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

The first thing that you need to know about a forex is that is the general direction of forex prices either upwards or downwards. The forex trend is the study and analysis of forex price movement upward or downwards.

Forex trading prices generally move within what is commonly known as a forex trend. Forex price movement can either move in a downward trend direction or an upwards trend direction.

To study forex trends - traders use forex trendlines to show the general direction of the trend.

A forex trend can be upward -therefore forex traders will draw an upward forex trend line on the forex chart

A forex trend can be downward -therefore forex traders will draw a downward forex trend line on the forex chart

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

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

Tutorials for Drawing a Forex Trend Line

To draw a forex trend line - traders will need to follow the guidelines for drawing a forex trendline

At least 2 charts points are needed to draw a forex trend line - when 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 upward forex trend line or downwards forex trend line.

Forex prices should move within this trend line & forex prices should not go past the trendline. As long as forex price is within the trendline then market trend is still intact.

The forex prices should move along the direction of the trend until such a time when the trend line is broken. Once trend line is broken then forex traders will analyze this as a possible forex trend reversal signal because forex prices are not moving along the support levels or resistance levels provided by trend line & thus this may mean that the forex trend is no longer holding.

Drawing an Upwards Forex Trendline

When the forex price moves upward it forms higher highs & higher lows forming an upwards forex price movement. An upward forex trendline can then be drawn by connecting these forex price higher lows.

To draw this upward trend-line - we use support levels. To plot the upward trend-line correctly two support zones are needed.

How Do I Read An Upward Forex Trend Line

Drawing a Downwards Forex Trendline

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

To draw this downward trend - we use resistance levels and to draw a downward forex trend correctly two resistances are needed.

How Do I Read a Downward Forex Trend Line

How Do I Read Market Trends?