FOREX MARKET

In the article I wrote about technical analysis, I explained that everything you see on the price charts, including trendlines, triangles, pennants, flags and … are all created by support and resistance levels which are in fact selling and buying limit levels. In this article I want to talk about these formations in more details and show you some strategies that you can use to take proper positions. You can use the techniques you learn here both in forex and stock market.

A trendline is the direction of the price movement which is formed by different peaks and valleys (highs and lows).

Some traders use only trendline to trade. It means when they see a trend, they just take the proper position and follow the trend. When there is an uptrend, they take a long position and when there is a downtrend, they take a short position.

A trend is called uptrend we have higher lows and downtrend when we have lower highs.

Some other traders don’t trust the trendlines. They think that it is always possible that a reversing happens. So they don’t take any position when there is a trend. They wait for a reversal. Both strategies have some advantages and disadvantages.

Here below, you see a big uptrend in the EUR-USD daily chart. It is a big uptrend but as you see there are a lot of smaller trendlines too.