How To Determine FOREX TREND Direction: 3 ULTIMATE tips to Identify The Currency Trend Hey Guys,
Today I want to show you how to determine the forex trend direction using these 3 ultimate tips!
I understand how difficult it can be when you’re learning, to just even figure out which way the market is moving, let alone placing those first or early trades. When I started out, I really struggled with this concept and I lost too much money early on because of not knowing how to correctly identify which way the markets were moving.
But, fear not, there are 3 fantastic ways that I personally use to correctly determine the direction of the Forex trend and I want to share these tips with you right now!
My name is Chris n, The Posh English Trader let’s dive into the good stuff – stay tuned til the end because I’ve saved the best tip til last!
Tip #1 – The Moving Averages
One of the most common methods is to add a moving average to your chart. Some traders try to get away with just one, however, I have always found 2 to be much more accurate in identifying the trend, especially early on.
The two that I prefer to use are the 20 and 50 day moving average
I use these to trade the higher time frames like the daily and 4 hourly – if you are using lower time-frames you may need to use smaller moving average amounts
So, once you have put them on your chart – if the 50 day moving average is below the 20 day then the forex pair is in an uptrend.
If the 50 day moving average is above the 20 day then the forex pair is in a downtrend. As you can see here the cross of the 2 Moving averages can signal a new trend – in this case a downtrend
Tip #2 – Trendlines
Trendlines can be drawn across your chart to identify uptrends, downtrends and ranging trends.
When drawing a trendline to identify an uptrend, it must be placed below the trend and should meet with at least 2 low points. The second low point must be higher than the first to confirm the uptrend. There must also be a series of subsequent highs.
When drawing a trendline to identify a downtrend, it must be placed above the trend and should meet with at least two high points. The second high point must be below the first to confirm the downtrend and there must also be a series of subsequent low points
When drawing a trendline to confirm a range, use 2. One should be drawn at the support area and the other should be drawn at the resistance area. The support line must touch at least 2 low points to confirm the support area and the resistance line must do the same.
Last, but certainly not least we have my number 1 tip for identifying the trend
Tip #3 – Highs and Lows
This method of identifying the trend is the simplest.
When identifying an uptrend you will be looking for the market to be making a series of higher highs and higher lows. If it makes 2 of each of these consecutively then an uptrend is confirmed.
In the case of the downtrend you will be looking to identify lower lows and lower highs. Again, 2 of each of these consecutively confirms the downtrend.
It really is that easy and that’s why I like this method the most!
Ok, so you just learned 3 simple ways to identify the trend of any market….
Now, was this valuable so far?
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My name is Chris N the Posh English Trader, I hope you enjoyed this video. If you did make sure you subscribe and hit that bell notification to be notified of all my future videos.
Make sure to share this video with all your friends and comment below because I want to know if you are already using any of these tips successfully as part of your strategies.
Until next time….
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