Forex Trading Trends - Uptrends, Downtrends and Sideway Trends
Forex trading trends are used in technical analysis, in order to view the general direction of the currency. Trends are identified as uptrends, downtrends and sideway trends. Without the use of trends Forex analysts wouldn't have the ability to predict the direction of the currency price at any given time.
Forex Trading Uptrends
An uptrend is a Forex trading trend that occurs when the general direction of the Forex trading currency you are trading is upward.
Forex uptrends are used by traders to make profits while the trend lasts and until it reverses. The goal of most technical traders is to identify a strong uptrend and to profit from it until it reverses, and with this Forex trading trend strategy, you are able to cut down on unnecessary losses. The best way to use uptrends is to sell the currency once the new peak become lower than the previous peek.
Forex Trading Downtrends
A Forex downtrend occurs when the general direction of the Forex currency you are trading is downward.
To use downtrend is similar to uptrend use, you simply monitor the currency chart and notice when one peek becomes higher than the previous peek, indicating a reverse in the Forex trading trend direction. Downtrends are also useful tools to determine potential trading losses
Forex Trading Sideway Trends
There isn't much to say about sideway trends, except that they are trend stages in between uptrends and downtrends. Sideway trends usually do not tell much about the currency situation, even though they can hint on a nearing reversal in the trend direction. These are Forex trading trends that are less frequent but still give important information for the online trader.
Now that you've learned all there is to know about Forex trading trends, go on and see how you can use it in the actual Forex trading market.
Jim Barns, Market Analyst