What Is A Trend In Forex

Last Updated on February 24, 2021 by Alphaex Capital

 

What is a trend in forex

Before we get into the good stuff, there are a few more concepts you must understand before we progress.

One of these is understanding what is a trend and its importance.

So…

What Is A Trend?

Quite simply in trading terms, it defines whether the market is either moving upwards, sideways or downwards.

It’s an important skill to learn because you should never trade against the trend unless a counter-trend opportunity presents itself. By the end of this free forex trading course, you will know exactly how to define a trend and trade it with laser-like precision.

How to identify an uptrend

To identify an uptrend is super easy, simply load up a chart and see if it is rising upwards 45-degree angle.

In the example below, it shows an upward trend in the GBP/USD Weekly chart

Free Forex Trading - What Is A Trend Example 2

This would be considered a bullish sign.

The term bullish in trading means that the market sentiment is expecting the market to rise further.

How to identify a downtrend

You can easily spot a downtrend by using the same logic as the uptrend but opposite.

By looking for a chart that is moving downwards at a steep slope.

In the example below, we show the GBPUSD on the 30-minute timeframe

Free Forex Trading Course - What Is A Trend - Downtrend Example

This would be seen as a bearish sign which means that the market sentiment is expecting the market to fall further.

How to identify a sideways trend

Commonly called a channel, range, or accumulation/distribution zone, sideway trends are usually where both sellers and the buyers are indecisive. This causes the market trade upwards and downwards repeatedly creating a square formation. Sideways trends are indicators that the market is about to move to either the upside or downside.

What Is A Trend - Sideways

As you can see in the GBPUSD 1 hour chart above the market is moving in between the orange and blue lines.

This highlights that the market has been “range-bound” or traded within these two lines. These are very easy to spot and we will teach you how to take advantage of these sideways trends in this forex trading course.

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