Forex Trading Downtrend Strategy - Selling at the Top
When new investors view downtrends, they often avoid placing transaction, because they do not understand that the Forex trading market can be profited from in both ways - through buying and through selling.
In order to use Forex trading downtrend strategy, first glance at the hourly chart and try to figure out what the big picture is concerning the currency. Take special notice of support and resistance levels that will be a good guide to invest within. Also glance on the 15 minute chart and compare the Forex trading downtrends of this chart with the hourly chart.
Ask yourself this - Is the current trend a Forex trading downtrend? If so, is it a substantial one? What are the odds the currency price will continue in this direction, and for how long? You do not have to have exact answers to these questions, only assumptions based on the knowledge you'll attain over time. Using this Forex trading downtrend strategy, you will eventually be able to use Forex trading for a living.
Other techniques include :
- Using the moving averages indicator, and comparing the current price with 60 other price examples. The current price should be lower than the moving average, and this indicator should point to a downtrend.
- Comparing the current price with the previous highs and lows of the currency.
- Noticing the levels of tops and bottoms over the last week.
If the previous information point to a Forex trading downtrend, then you should go ahead and sell the currency pair. If the results are ambiguous, stay updated and continue to keep track of changes in the currency that can point to a good timing for entry.
Tracy Jones, Forex Senior Editor