TREND
In Forex, the only advantage we can get when the price moves. Yes.
Only when the price moves. Whether he's moving up or moving down. Well
the price tendency moves in one direction that is the trend. The trend
itself is very useful and is the most important part in determining your
position in the trade. Regarding the position in trading there are only
two i.e. buy and sell, then any trend has only two types namely an
uptrend and downtrend.
Let's look at the picture below:
Just imagine if we did not know how to look for trends in price
movements like this. When prices are in a trend of down you open a buy
position and vice versa when the price moves up, you open a sell
position. Hegh ... At least you will not be able to sleep soundly in the
circumstances because the position that snagged hehehe.
So to determine the trend is happening is very important and You should
not ignore it. Ignore, then You will just be trading a gambling.
Underestimate, then the market will kick you to painful days and
sometimes months. Dependent social effects caused because you lose some
money.
Most technical analysis is used to predict trend and
the extent to which the trend will last. Some indicators like Moving
averages or Parabolic SAR is also used to know are kemanakah market
running. There are however circumstances where the market does not move
up or down commonly called side ways. In such circumstances, the open
position buy or sell the same spend patience ultimately erode your
emotions in trading. The situation of side ways usually happens when
European or American markets are closed or are waiting for the big news.
In such circumstances there is not much trading going on thus causing
situations side ways going on. Well, avoid this situation.
There are two ways to read the forex trend, There is :
1. Using the trendline
Because of a trend is a move "PROGRESSIVELY" became over time, then for
the rising trend can be identified by the presence of two valleys that
sprout. As for the down trend characterized by the presence of an
increasingly humble hilltop
. From the position of a point
GETTING above, we can draw a trend line. For a graph of the trend lines
are not crossed then that menendakan is going trend.
2. Using Indicator
Rules of the game to read the trend indicator is:
If indicators were below the graph, then the trend is bullish (trend rising), conversely, if the indicator is above the graph, then the trend is bearish (down trend).
Support and Ressistance
The points where the increase and decrease in the price of the stop called point support and the ressistance. The lower limit of normal price movement called Support while topped commonly referred to as limit ressistance.
The second point is very vital in your trading. Without knowing the point then we can only follow the trend without knowing that the actual age of the trend is not going to soon will be replaced with the opposite trend or a situation of side ways.
There are many ways of determining a point of support and ressitance. Some traders use indicators to figure it out. Others use the Fibonacci sequence while others use history of price movements in the past. I myself do not want to get too giddy to calculate support ressistance by using complicated calculations. Forex for me is enough complicated by complex psychology and analysis inside. So, why don't we just simplify? Sometimes simple is better.
The easiest way to determine support and ressistance is by knowing the lowest and highest price movements in the particular period in which, for example, one month. Consider the following graph:
The above graph is a graph for GBPUSD on January 14, 2011 with a period of 1 hour. Note that the price moves up but does not exceed the area that had marked a line in blue. When the price moves up to approaching 1.5885 then as if the price of losing its ability to move up the pass, and vice versa when he moves down, the price can not penetrate the point which is the limit terrendahnya 1.5575. The point that's called 1.5885 ressistance and 1.5575 named
support. The second point is actually a reflection of psychological point recognized by market participants simultaneously. As we know together that essentially price movements are determined by the law of demman and supply (supply and demand). When demand rises while supply remains then the currency will strengthen and vice versa when supply and demand remain so much currency will weaken due to the abundance of supply in circulation in the market.
Well in case the price uptrend for example, then psychologically it will cause a big snowball tergulirnya and corroborate. When prices start creeping up then as traders will usually follow the trend is going on and take a new buy position. This has resulted in rising demand so prices continue to terdongkrak
up. But on the other side the majority of traders are also anticipating the end of the trend by taking a point certain ressistance. At that point they are no longer doing the buy action otherwise they would perform the action of profit taking by selling the currency they have bought before. Well, if everyone do so automatically reduced demand and rising currencies began to lose power. As a result, prices moved down again.
So the key here is how to determine a point of support and the same with point ressistance support ressistance market collectively. If we know these points then it would be much easier trading.
Then a new question now appears in our minds: could it be a point of support and can be penetrated by ressitance price movements? The answer is maybe. Hard indeed but maybe-just maybe.
In a State where buyer and seller win less, of course prices can return continues to rise despite already reaching the point of ressistancenya. In a State so then actually vote point of support and not uniform on the market a ressistance and is divided into several groups. One group estimates the price will not go up until a certain level while other groups argue the price can go up melewari level first group specified. If the second group win, of course support or ressistance
will break. What will happen when the point of the soup and the impregnable res? The answer is will form a point of support and new ressistance. The impregnable ressistance point will be a point of support while new ressistance point will return to form. Consider the following image:
Now the next question left is how to know that the price point will penetrate his ressistance support or not. Hahaha, when it's up here, you have to learn some technical analysis instruments, especially the type of oscillator for menegetahui point of buying or selling saturated saturated. It should be also taken into account the fundamental situation is happening. It's not easy indeed. Most know the critical points of the translucent whether soup and res from his experience after many years of trading. Yes I also sih. So it must be recognized that experience matters.
OK kids up here the lessons of our res and soup. Pretty easy isn't it?
Overbought and Oversold
Ok we get the next point of technical analysis that is a term named as saturated saturated buy and sell (overbought-oversold or commonly abbreviated as OB and OS just let me not tired of writing it). OB and OS is a situation where the price can no longer continue the trends because it was too expensive or too low prices so that the trend can no longer continue. Unlike the soup and res which is basically psychological level is merely a mutual agreement is not the official among fellow traders, OB and the OS itself is a real and commonplace circumstances occur in the market (not simply a psychological matter).
If a rising trend is going, then in these circumstances the currency become more expensive than usual. If we find a graph of GBPUSD are uphill ride for example, it means that the value is being increased by GBP expensive compared to USD. Market makers continuously persecuted the GBP because of required prices will continue to go up and they still have enough capital to do the action of purchasing
. But there will be a point where the buyer is no longer possible to buy GBP due to its price was too expensive. Buyer's opinion matters not only that the price is too expensive, but more than that is their capital already can no longer suffice to buy a certain amount of GBP. Well this is what the State is called the point of saturated buy or OB
. Conversely when the downtrend is going on, there will be a point where prices will stop down because the sale price is already too cheap so that the seller is no longer possible to sell its currency or they will be losers. This is called saturated selling OS.
In the circumstances the price reaches that point in its OS or OB then expected the price would turn direction and trend will soon cease. So when moving up and point the OB is already reached, then the prices will again rise trend would stop and then replaced by moving the fall in the currency. Vice versa when the price moves down and then entering the area of the OS then the prices will move back up and the trend down ever quit.
Often the OB and OS also occur at points of soup and Res because indeed they are points that are the same i.e. the trend counters. But not always the case. Of course buy and sell decisions will greatly support the once when prices are not on extreme points.
Now the question is how to determine the point of OB and OS? The easiest way is to use an indicator of type Oscillator such as RSI or Stochastic. These indicators are indeed designed to determine dots OB
and OS. Let's use an example of an indicator: the Stcohastic Oscillator. On Stocastic OB area, occurs when the value of the Stochastic is at a level above 80 and the OS occurs when the Stochastic is under 20 level. Note the picture below:
The area that is given the color blue is a saturated area buy and sell saturated. You can see it on a blue rectangle which I describe. When the price moves down, and then touched the saturated area selling price back then move up because the price is too cheap for sale by the seller. The same situation also occurs in the saturated area.
About the use of Stochastic is more detail we will be discussed at the next session of technical analysis.
Please be patient. Now with that in mind we can estimate kapankan a trend ended and was replaced with the next trend. Thus, we can set the timing of the opening position for the better again.
See you at the next lesson.
