Forex Trendlines

When you are trading Forex, there are three trends that traders talk about; uptrends, downtrends, and no trends (or also known as rangebound).

 

Uptrends are defined as a trading instrument that is moving higher and making higher highs. The higher highs show that buyers are getting more aggressive with their demand.  In this chart, not only was the GBPUSD moving higher for three weeks, it showed consistent growing demand as seen by the higher highs.

Downtrends are the opposite and occur when a trading instrument is falling with lower lows.  The chart below shows how the EURUSD dropped from 1.42 to 1.26 from October 2011 to January 2012. On its way down it kept making lower lows.  This showed that sellers kept getting more aggressive with their  selling.  Just because it made lower lows doesn’t always mean it will keep going lower, but as the saying goes, Forex traders that try to pick bottom end up with smelly fingers.

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