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Trendlines show the trends of Forex charts part2


Today, let’s learn about the trend line. The trend line is the most common and often used in technical analysis, and it is important to know the direction of the price based on the support line and the resistance line.

In general, exchange rates tend to move in either direction for a certain period of time. This is called the trend. If the exchange rate is showing an upward movement, we call it “uptrend”. On the contrary, if it is falling, it is called the downtrend.

A trend line refers to a line connecting two or more significant points. A trend line is classified into uptrend lines, downtrend lines, and sideways trend lines depending on the type. The uptrend line refers to the line connecting the troughs(low point of cycle) in the uptrend. The downtrend line refers to the line connecting the peaks in the downward trend. A sideways trend line is a line connecting troughs when the exchange rate does not show a clear trend and the line moves in a limited range.

Uptrend line

As shown in the chart above, the uptrend line is the rising trend line that connects the low points. As long as the exchange rate does not go down through this line, you can expect the uptrend will continue. On the other hand, you should be careful when price line goes down through the uptrend line.

Downtrend line

In contrast to the uptrend line, the downtrend line is connecting the peaks in the declining trend. We can expect the downtrend to continue if exchange rate doesn’t go over downtrend line. However, if price line goes over the downtrend line, the downtrend can turn to uptrend. That is why you need to beware of it.

The longer the trend lines, the more gradual these trend lines are, and it is more reliable when judging whether the price goes up or down. The longer trendline means that the trend is clear, and the gradual trendline means that the change of trend will not appear immediately.

Knowing the trend makes Forex trading much easier. Next, l will bring the topic that is about the point of buying and selling using the trend line.

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