- CFDs & Forex Trading | Online Trading
- About Us
- + Accounts
- + Trading Conditions
- + Instruments
- + Promotions
CHAPTER 4 - LESSON 4
Trend analysis is a key component of technical analysis. It involves identifying the direction of a market trend before making trading decisions. To achieve this, expert analysts use trend lines, moving averages, and momentum indicators.
Below are some key facts to understand about the indicators for trend analysis:
Lines are drawn on a chart to connect the highs or lows of price movements.
• Traders use trend lines to identify trends in the market and will then make trading decisions based on those trends.
Indicators that calculate the average price of a currency pair over a specific time period.
• Traders use moving averages to identify trends in the market and to generate buy and sell signals based on the crossing of different moving averages.
Include the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD).
• Traders use these to identify the strength of a trend and to generate buy and sell signals based on divergences between the indicator and price.
We suggest traders use a combination of trend analysis tools and indicators in order to identify trends in the market. Remember that trends can change quickly, and you should use risk management strategies, such as stop loss orders, to manage your positions accordingly.
To summarize, trend analysis is a key technical analysis component. Technical analysts use trend lines, moving averages, and momentum indicators to identify trends in the market. In the next section, we will talk about some of the main risk management strategies experts use.
Apply now to start trading