Judging market trends is a compulsory course for all foreign exchange traders. Traders’ orders are carried out around market trends. Today I will talk to you about the understanding of the foreign exchange trend line.
The foreign exchange trend line is a straight line formed by connecting constantly fluctuating exchange rates. We can divide the foreign exchange trend line into a support line and a pressure line. Connecting the low and low points of the exchange rate band into a straight line is the support line; connecting the high and high points of the exchange rate band into a straight line is the pressure line.
The more exchange rate points connected in the foreign exchange trend line, the stronger the reliability of its judgment of market trends. The length of the trend line is directly proportional to its importance. Therefore, the distance between the first point and the second point of a long-period foreign exchange trend line and a medium-period foreign exchange trend line should not be too close, if the distance is too close, it is formed The importance of the trend line will be greatly reduced.
The connection form of the foreign exchange trend line is divided into a low point and a low point connection and a high point and a high point connection. If the market exchange rate in the trend line is a low point higher than a low point, then this trend line is called an uptrend line; if a high point in the trend line is lower than a high point, it is a down trend line.
In addition, there is also a situation where the low and high points of the exchange rate in the trend line do not have a particularly obvious upward and downward trend, but extend horizontally. We call this the sideways arrangement in the trend line, or box arrangement.
The last thing to say is that the perspective of the foreign exchange trend line is also very important for foreign exchange transactions and requires traders to pay close attention. If the angle of the foreign exchange trend line is too flat, it will appear to be insufficient, indicating that the market is not easy to generate a big market immediately; while a too steep foreign exchange trend line indicates that the market cannot last and a reversal trend may occur soon.