How To Determine The Trend?

How To Determine The Trend?

What is a trend?

trend is a tendency for prices to move in a particular direction over a period. Trends can be long term, short term, upward, downward, and even sideways. Success with forex market is tied to the investor’s ability to identify trends and position themselves for profitable entry and exit points.

How to identify the trend?

In order to identify any trend, you will need to use simple price action and higher timeframe analysis to identify what price is currently doing and what it might do in the future.
In the example below I will break down GBPUSD going from the Weekly Timeframe down to the 4hourly and explain how you would enter the market.

 

GBPUSD Weekly Chart

This is the weekly chart for GBPUSD, In this example we have highlighted 3 areas of interest with a blue bar.

This represents an area where price broke through several times in the past and was re-tested and you can see by the rejection candles.

GBPUSD Daily Chart

We have now come down to a lower timeframe the daily to understand what price is currently doing, in this example we can see a big rejection.

If we look to the left we can see price has struggled to break this zone from above and below a few times in the past so its likely that price is being rejected and pushing back up

We have marked this zone off with a yellow box as the current level of interest

GBPUSD 4 Hour Chart

Now going down to the 4 hourly chart we can see that price has rejected this area and is going back up. If we look up we will need to determine a level of previous rejection and highlight it as this would be our target.

But by doing all of this you can see what price is currently doing and determine the trend, the overall trend is bearish but price is pushing back up before probably falling again