How to determine a trend visually or using indicators

Trading with a trend is the basis of most strategies that are currently used in Forex, so one of the pressing questions is how to determine the trend, or rather its direction, over a selected time period.

To understand this issue more accurately, you should clearly understand what a trend is and what its direction depends on, as well as understand some of the features of determining its movement.

First of all, it should be noted that the direction of the trend directly depends on the time period on which you conduct technical analysis.

That is, if there was a price increase during the day, this does not mean that it grew continuously without significant fluctuations.

It is this aspect that plays a fundamental role in determining price movement on the working timeframe.

Stock trend options

Ascending – each price peak is higher than the previous one.

Downward – each price fall below the previous value.

Flat – the price practically does not change; it is quite difficult to determine the trend at this time, since the price moves almost parallel to the time line.

It follows that before starting an analysis to determine the trend in Forex, you first need to select a time period for trading and determine the possible duration of the transaction.

The most correct approach at this stage would be to analyze not only the desired time frame, but also two neighboring ones, for example, we take H1 as the main time period, and H4 and M30 as two auxiliary ones.

The ideal option is if there is one trend on all three time periods, in which case you can safely open a trade in the direction of the price movement.

In other situations, the following scenarios are possible:

• On M30 and H1 - upward, on H4 downward - there is a correction or a price reversal has occurred, you should wait to open a deal or open an order for a short time.

• On M30 – ascending, on H1 and H4 – descending, a similar situation as in the first case.

In order to determine whether a reversal or correction is happening in the market, you can look at the latest news feed; if there are no visible reasons for changing the direction of the trend movement, it means that the price will soon return to the main rate.

To be completely confident in the direction of a trend, you need to know the reason why it arose, this could be important news or an internal situation in the market (increased demand or supply).

Also, to determine the trend, tools such as price channels can be used; with their help, you can easily determine where the price is in relation to the channel boundaries:

A breakdown of one of the boundaries can indicate both a beginning reversal and indicate a settling of the existing trend.

Read more about price channels here - http://time-forex.com/terminy/price-channel

How to determine a trend - the answer to this question can also be entrusted to special technical indicators that will do all the analytical work for you; some of these scripts give a fairly accurate assessment of the situation on the market.