How to Recognize Uptrends and Downtrends in Forex Trading

Every trader is a trend hunter. They look in the tune of the market and carefully analyze all the upbeats and low beats to find a way to join the song. The Forex market has introduced different instruments to enable investors to comprehend and to explain market behavior. Among all these instruments, price charts are regarded the best. Those are the main focus of various technical analyses. They explain the price movement in terms of it.

How to Recognize Uptrends and Downtrends

A trend is usually the representation of different phases of the index movement. As long as, any of the industry influencing variables get changed, the movement either go upward or downward. There is another movement which is named “sideways.” Let’s get introduced to them.

1.     Upward Trend

When the price for a particular currency pair is only moving higher or into the above trajectory, it is an upward move. In the forex industry, it is also known as a bullish trend. The troughs and peaks of such movements keep escalating. They have higher highs and lows. It represents the favorable sentiment of the market, and the currencies get more appreciation.

2.     Downward Trend

The price moves lower in a downward it. The other name of it is the bearish movement or bearish trend. The peaks and the troughs get lower gradually in a downward trend. It has lower highs and lower lows. A bearish movement represents the negative sentiment of a market. The currencies get less appreciation during a downtrend. Know more about the different stages of the trend by using demo account from Rakuten Securities Australia. It will allow you a safe learning place.

3.     Sideway Trends

It happens when a currency’s value receives a nominal impact from all the driving force of the business. During a sideways, the industry doesn’t feel the necessity to explain anything.

Once a person forms a purview over all those three kinds of those, the next step for his trading apprenticeship will be learning how to debunk them. The earlier one can notice it, the more beneficial it can be to him. Now, there are some specific aspects to look into before declaring it.

  • Historical Charts: Digging into the historical pattern and holding it in comparison with the current condition is the best method to mark a spawning movement.
  • All-time high: All-time highs are another ideal revealer of different price course
  • Indicators: Though the current behavior of the price has little to do with its future behavior. But traders can take help of different analyses to point out or predict that behavior. Analyses reveal it with the help of various instruments, such as

  • Moving Averages: This one is the most practiced and popular one. Due to their prevalent practice, every trading platform includes the option. Moving averages provide a comprehensive and transparent vision of market
  • Bollinger Band: This instrument is held as a reliable indicator of the current volatility level. Three kinds of brands which are higher, middle and lower, comprise the Bollinger band.

Getting Familiar with Different Market Catalysts

Other than these features, a novice trader should entitle himself in learning different catalysts like:

News Events

News covering any critical political, financial events or their proclamation can affect or induce a price course. Positive news can evoke an uptrend where a negative can elicit a degradation.

4.     Financial Reports

Another impactful element for the exchange business. A good earning can set an optimal momentum for a trader, whereas a bad earning report can only destroy a momentum.

5.     Change in Managerial Level

A good leader can be beneficial to the escalation of a country’s currency value. Conversely, an imposter can only help in keeping investors away from anything about the country he represents.

The discussion of different trends is a very elaborated one. Here in this article, we have only tackled the most basic information just to help traders embark on their journey.

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