MARKET TREND

The trend corresponds to the direction of the market, that is, the direction in which they move the high and low price points.

We can identify three types of trends: HIGH TREND – LOW TREND – TREND SIDE

TREND HIGH – Maximum and minimum progressively higher or successive breaks of resistance.

There is a buyer’s market with consequently higher prices.

 

TREND LOW – Maxima and progressively lower minimum or successive breaks brackets.
There is a seller’s market accordingly with falling prices.

 

TREND SIDE – Maximum and minimum at similar levels.

There is a market aimlessly with constant prices.

 

DRAWING TREND LINES

The design of a TREND LINE HIGH makes joining at least two minimum.
The 2nd. minimum (3) should be higher than 1st (1).
Identified the two minimum, we draw a line segment that one, extending the line to the right.
The trend is confirmed only if there is a 3rd minimum (5) even higher.

 

The design of a TREND LINE LOW makes joining at least two peaks.
The 2nd maximum (3) should be lower than the 1st (1).
Identified the two maximum, we draw a line segment that one, extending the line to the right.
The trend is confirmed only if there is a 3rd maximum (5) even lower.

UTILITY OF A TREND LINE

1) Identify any points BUY (HIGH TREND) or SELL (DOWNTREND) points.
2) The rupture of a trend line is probably the first and best trend change signal.
In these circumstances we can take a relatively safe position since the level of risk (STOP LOSS) is close and well identified.