At trading, trend is our friend. To trade ride a trend, we need to learn about the support and resistance levels in the market. Supportand resistance represent a very critical point, where the forces of demand and supply generally meet. By using these levels, we can easily determine the potential trade setups in the market and find the profitable deals.
Support indicates a certain level where the currency pair or stock price tends to gain the bullish momentum. Based on the sufficient demand, bulls pushes the price to a higher level. In such a way, a resistance line may indicate the level of currency pair or stock which may find the sellers and the price of the asset will not rally further. This means that sufficient supply is available to push the price of the asset down. And such variations of the price movement creates the dynamic trend in the market.
Types of trends
In the Forex market, the trends indicate the change in the average pricing over time. Generally, it exists all-time in all markets such as Forex, Equity, or commodity. Investors should analyze the market based on the stocks or the currency pairs of different countries. Without having the proper understanding of the position-based market analysis, making a considerate amount of profit is impossible. There are varieties of trends, and those are Uptrend, Downtrend, and Sideways.
Sideways
When the movement of the currency is range-bound between resistance and support, this is called the Sideways. This happens when we find the trend does not have a specific sense of direction and can stay in this pattern of range for a certain period. To identity the trends regarding the sideways, the investors often draw lines horizontally, which are connected with the lows and the highs of the price. It then takes the form of the resistance and the support levels.
Generally, the participants in the platform become uncertain about the trend as no price change is found here. Feel free to visit Saxo capital markets and learn more about the sideway market. As you learn more, you should be able to scale the trade in a better way in such market conditions.
Uptrend
This symbolizes that the market is going to enter into a bullish market by taking the uptrend. It signifies that value is going up continuously with a little amount of downward movement in the intervals. If there is no chance of a break down the upward trend will continuously move. But even we are in the bullish trend; we have to be cautious of it as the move may go down at any time. To take a short position, beginners must be cautious and try to understand the pattern.
Downtrend
In the Forex market, a downtrend may work as the decline of the moving average with slight upward movements in the interval. It results in a negative value in the pricing, and it can be prevalent for a certain time. The price movement in the chart can indicate sequential lower peaks and lower lows. But one great benefit of FX trading is that as the currencies are traded in pairs, like the other platform, the bullish situation does not affect greatly here. It indicates that one currency will always be up even the market move is not in up with the financial condition. Major correction or minor correction also helps to find out the right move in the form of the wave, which can be picturized graphically. A beginner trader should utilize the data regarding the market movement to make the best decision.
In conclusion, it can be easily understood that the proper understanding of the market movement is very crucial to execute the trades in the FX platform. Newbies are very callous to utilize their time on the perfect research. It is very deleterious for gaining success and for this reason experts invest their time on the proper study about the trading.