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Finding Trends on Forex Charts

Candlestick Forex Charts

When you look at forex charts you have to consider what exactly you are looking for.  There are a lot of traders who use the charts to determine trends in the market prices.  If you are one of these traders then you need to know more about forex charts and the trends that you can find.  It is important that you know about the different types of trends you could be looking for.  You should also consider how you find them on the charts and what trendlines are.  It is important to note that trends can appear at any time on the market even when the market is technically a range market.  The trends in a range market will simply be shorter and smaller than those in a trend market.

The Types of Trends You Find on Forex Charts

There are three main trend types.  These are sideways, down and uptrends.  The sideways trend occurs when there is not much movement between the up and down movements.  There are those who maintain forex charts who do not believe that a sideways trend is actually a trend, but rather a lack of a defined movement in either direction.

The Length of the Trend

To keep in line with the three types of trend, there are three lengths of time that can be attributed to trends.  Regardless of the direction of the trend, it can be classified as either a short-term, intermediate or long-term trend.  In the forex financial market, a long-term trend is classified as a range of intermediate trends.  Short-term trends are composed of intermediate and major trends.

What are Trendlines?

This is a technique used in charts which represents the trend in a foreign currency pair.  It is simply drawing a straight line that follows the trend that is set.  These lines are also used to identify reversals of trends.

An upward line is normally drawn in relation to the lows of the upward trend.  A downward trend is drawn at the downward trend’s highs.  This is indicative of the resistance level that a specific currency pair goes through when its price moves upward from a low to a high.

There are several charts available that will provide you with the opportunity to predict the movements of your currency pairs.  You should try to obtain a basic understanding of all the available charts to determine the one that is most suited to your strategy.  Some of the more popular charts include candlesticks, bar charts and head and shoulders.

Candlestick lines illustrate the value of a currency when it opens, its low, high and when it closes on a particular day.  The wide part of the chart illustrates the range that existed between the opening and closing price of the day.

The head and shoulders is one of the most popular charts used in the forex market.  It is indicative of the point at which the currency is due to rise or fall.

It is important that you understand and are able to identify different trends to enable you to trade in a similar direction to the currency pair rather than moving in the opposite direction.




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