June 27, 2017 /Finance Attitude/ -- The number of Forex traders is increasing every single day due to its lucrative potential. Most of the trader’s jumps into the world of online Forex trading incur huge financial losses in the market. If you are trading the Forex market for more than one month then you should have heard the word “Trend”. There is a well-known proverb in the financial industry that the trend is your friend. So, if you truly want to make a profit in Forex trading then you must know how to trade the trend line in the market.
SO what is a trend? The answer is pretty simple. The Forex market is either moving up or it is moving downward. This upward and downward movement of the market is known as the uptrend and downtrend in the market. If the market stays confined in a region for a prolonged period of time then we will be saying that it’s exhibiting sideways movement.
So let’s see a trend line in the USDCAD currency pair.
Figure: Trading the trend line in the market.
In the above figure the professional draw a bullish trend line in the market. So in order to draw a bullish trend line in the market, you need to connect at least three lows in the market. From the above figure, you can clearly see how the three significant lows are connected via the sloping line. This trend line acts as a strong support level for the USDCAD pair and professional traders will execute their long orders in the market when the price hits the critical support level of the trend line.
Trading along with the trend has always a unique advantage in the Forex market. In the eyes of trained professional in order to succeed in the Forex market, the trader should always concentrate to trade along with the trend. Expert Forex traders will be looking to execute buy orders in the market after the price a correction. Correction is a term used in the Forex market which refers to the opposite movement in the market. In the above figure we can see that the USDCAD pair is in an uptrend so when the pair is moving downward we will be saying that it’s in the corrective move.
So in case of the downtrend, we will be connecting higher lows in the market. And the sloping trend line will be action as a strong resistance level in the market. Professional Forex trader will be selling the pair at the bearish trend line resistance. When you trade the trend line always make sure that you are using higher time frame to draw the trend line in the market. And if you know the price action signal then you can use price action confirmation signal to execute your trade near the trend line support or resistance level in the market.