What Market Trending will we get to know on this topic so you can detect where and how you playing with the market
Trending is a market where prices have a tendency in a certain time with a Regular pattern with the pattern and strength tend to be similar within a specific time period
Trends are usually formed by a "higher highs / higher high" and "low higher / higher lows" in an uptrend and a "lower high / lower high" and "lower lows / lower low" in a downtrend.
Liquidity is essential in a trend-based strategies. The currency pair is high liquidity, the more movement (aka volatility) we could
Liquidity is essential in a trend-based strategies. The currency pair is high liquidity, the more movement (aka volatility) we could
ADX in Trending Market
A way to determine whether the market trend is experienced through the use of indicators Average Directional Index or ADX.
Developed by J. Welles Wilder, this indicator uses values ranging from 0-100 to determine if the price moves strongly in one direction, that is trending, or just ranges.
Value of more than 25 typically indicates prices are trending or are already in a strong trend.
The higher the number, the stronger the trend.
However, ADX is a lagging indicator, which means that he does not always predict the future. It is also an indicator of non-directional, which means it will report a positive number if the price trend is up or down.
Look at this example. Price clear downward trend despite the ADX is greater than 25.
Developed by J. Welles Wilder, this indicator uses values ranging from 0-100 to determine if the price moves strongly in one direction, that is trending, or just ranges.
Value of more than 25 typically indicates prices are trending or are already in a strong trend.
The higher the number, the stronger the trend.
However, ADX is a lagging indicator, which means that he does not always predict the future. It is also an indicator of non-directional, which means it will report a positive number if the price trend is up or down.
Look at this example. Price clear downward trend despite the ADX is greater than 25.
Moving Averages in Trending Market
If you are not a fan of ADX, you can also use the Moving Avewrage.
Place a period Simple Moving 7, period 20, and the average period 65 on the graph you. Then, wait for it to compress three high school together and began to spread.
If SMA 7 period out over a period SMA 20, SMA 20 and SMA above 65, then the price is trending up.
Place a period Simple Moving 7, period 20, and the average period 65 on the graph you. Then, wait for it to compress three high school together and began to spread.
If SMA 7 period out over a period SMA 20, SMA 20 and SMA above 65, then the price is trending up.
On the other hand, if the high school period below 7 period SMA 20, SMA 20 and SMA are under 65, then the price decreases.
Bollinger Bands in a Trending Market
One tool that is often used for strategy can also assist in finding trends. We're talking about Bollinger band or just a band.
One thing you should know about trends is that they are actually quite rare. Contrary to what you might think, the price range / sideway occurs 70-80 percent. In other words, it is the norm for the price range.
So, if the price deviates from the "norm" then they are in trend. What is one of the best technical tools we've discussed in previous classes to measure the deviation?
If you say Bollinger bands, you're right.
Bollinger bands are actually contains the standard deviation formula.
Here is how we can use Bollinger bands to determine the trend!
Place with a standard deviation Bollinger band 1 and band set with a standard deviation of 2. You will see three sets of price zone.
One thing you should know about trends is that they are actually quite rare. Contrary to what you might think, the price range / sideway occurs 70-80 percent. In other words, it is the norm for the price range.
So, if the price deviates from the "norm" then they are in trend. What is one of the best technical tools we've discussed in previous classes to measure the deviation?
If you say Bollinger bands, you're right.
Bollinger bands are actually contains the standard deviation formula.
Here is how we can use Bollinger bands to determine the trend!
Place with a standard deviation Bollinger band 1 and band set with a standard deviation of 2. You will see three sets of price zone.
Selling zone is the area in between the two bands below 1 standard deviation (SD 1) and 2 standard deviation (SD 2). Remember that the price has closed in order to be considered within the band sell zone.
Buy Zone is the area between the two bands above 1 SD and 2 SD bands. Like the sell zone, the price has closed in the two bands to be considered in the buy zone.
The area between bands 1 standard deviation is an area where the market struggled to find direction. Prices will shut down in this area if the price is really the "unpopulated zone". directions for pretty much up for grabs.
Bollinger bands makes it easier to visually confirm the trend.
Downtrend is confirmed when the price is the selling zone.
Uptrends can be confirmed when the price is in the buy zone.
Buy Zone is the area between the two bands above 1 SD and 2 SD bands. Like the sell zone, the price has closed in the two bands to be considered in the buy zone.
The area between bands 1 standard deviation is an area where the market struggled to find direction. Prices will shut down in this area if the price is really the "unpopulated zone". directions for pretty much up for grabs.
Bollinger bands makes it easier to visually confirm the trend.
Downtrend is confirmed when the price is the selling zone.
Uptrends can be confirmed when the price is in the buy zone.
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