Technical Analysis in Forex Trading

A trend is what is popular or hip at a particular point of time. A trend can be a reflection of the current times or it can be something that a group has been following for a very long time. A trend can be based on what is currently happening in the media or it can be based around what is happening in Hollywood at the moment. While a trend generally refers to something that is trendy or hip in culture or fashion, there can be a trend toward colder temperatures in winter which may also be following a trend in Hollywood.


Trend lines can be visual or statistical. In charts one can plot trendlines or trend angles. The trendline allows you to see the general direction of the trend and gives an indication of its potential future direction. The trend line shows the range that a trend covers. The trend is represented by the slope of the trendline. The slope of the trend line is equal to the slope of the said trend line.

Trendlines can also be graphical in nature or they can be based on simple technical indicators. These technical indicators break down the upward or downward movement of the price action. These indicator patterns help us understand the direction and the strength of the movement better. They also show the maximum and minimum prices along the trendlines.

There are many mathematical formulas for trend detection and these are used by technical analysts and trend traders to detect the prevailing market trend in the real time market. Some of these formulas are based on Fibonacci numbers while some others based on exponentially weighted least squares. The mathematical trend-detection algorithms give the expected direction and strength of the market trend as well as its momentum over a given period of time. Other Fractal indicators used by Forex traders include moving averages and the zigzag method which are based on mathematical equation solutions which are best known as Fibonacci indicators.

However, the most widely used method of technical analysis in the Forex market today is the moving average trend. It is usually the first indicator in technical analysis that can give the market makers an idea about the actual direction of the price action. Moving averages follow the rise and fall of a particular currency over a period of time. Some of the most prominent moving averages are the moving average convergence or MA curve, the moving average convergence/Divergence and the moving average trend line.

Traders use trendlines to identify market trends. These trendlines are considered to be very useful indicators in the identification of market trends in the Forex market. Some of the popular trendlines in the Forex market include the triangle trend, rectangle trend, double top trend, head and shoulders trend, band line trend, simple moving average trend, candlestick trend and lagging line trend.