Forex Basic : The Trend (2) – The Shorter Trend and Trend Channel

Secondary Trend (known as Medium-term trend)

Prices for long-term trend move from time to time in the direction of the trend. These movements can often be considered as short-term fluctuations. However, these movements are characterized by a significant aspect and lasting from one month to several months are considered as the secondary trend and more commonly as the medium term trend.

In the long-term rising trend in the EUR-USD pair, there have been occasional mid-term downturns. The pair, which fell back to the main trend support after the mid-term downtrend in 2005, continued to rise again from this support . Mid-term downtimes are generally raised when the momentum of the long-term trend exceeds. Excessive prices in prices can be considered as a profit realization for many big players. However, prices resulting from the correction lead to a rise in demand and hence prices.

Short-Term Trend

The trends in one day to three weeks. The weight of short-term investment in forex markets is higher than other markets. However, short-term trends may be misleading due to the fact that they are highly affected by the instant developments. Therefore, it will be more useful for investors to determine the general direction by examining the long and medium term charts.

The short-term uptrend in the EUR / USD parity in 2001 was weakened by the 0.9390 resistance. The short-term trend line, which was tested twice by the slimming result, was broken in the third trial and the short-term rising trend movement ended.

Hourly and even shorter graphics are widely used for technical analysis in forex markets. However, it is a more convenient option to take advantage of the minimum four-hour charts as the downsizing of the charts increases the margin of error. The short-term uptrend in the hourly USD / CAD chart was the result of a third-time testing of the trend support and a subsequent break.

Trend lines are drawn with reference to rising peaks in rising trends and reference to higher peaks in downtrend trends. However, there is a correlation between support and resistance in trends. For example, while rising trends tend to rise, rising rates tend to rise. A similar relationship is also valid for the fall trends. Falling peaks tend to fall in the downward trend, while their downtrends tend to fall. Parities entering the trend channel provide convenience in short term transactions. Generally, the testing of the channel line is considered as an opportunity to sell, and to test the trend support as an opportunity to buy. However, the fact that this approach is too linear is a risk factor of its own. For example, trend support is expected to work in a rising trend channel. It may not work. In the event that the support starts to rise again, it may mislead investors. For this reason, it is advisable to use the formations and indicators that you can examine in the following pages of while reviewing the trend channels.

The long-term rising trend started in the EUR / USD parity, which began in 1998 and ended in 2000, following the breakdown of the lowering trend channel. The remarkable point in this graph is that prices continued to rise after breaking the trend channel, but then, in the medium term decline, the broken trend line line was still in support.

Leave a Reply

Your email address will not be published. Required fields are marked *