How Do You Interpret Market Trends?
To read a market trend you need to first of all learn what's a trend & how you can identify a trend on a price chart.
First thing which you as a trader need to know about xauusd is that is the general direction of prices either upward or downward. The trend is the study and analysis of price movement upward or downwards.
Trading prices generally move within what's known as a market trend. Price movement can either move in a downwards trend direction or an upward trend direction.
To study xauusd trends - traders use trend-lines to show the overall direction of the trend.
A trend can be upward -therefore traders will draw an upward trend line on the chart
A trend can be down ward -therefore traders will draw a down ward trend-line on the chart
An upward trend line is a diagonal sloping line which slopes upwards thus its name - upward trend line
An downward trend line is a diagonal sloping line which slopes downwards thus its name - downwards trend-line
Tutorials for Drawing a Trend-Line
To draw a trend-line - traders will need to follow the principles for plotting a trendline
At least 2 charts points are needed to draw a trendline - when the third point touches the trend line without going through the trend line then the trend line is then considered as valid.
The direction of the trend line either upwards or downwards will define the direction of the trend - direction can either be upward trend-line or downward trend-line.
Prices should move within this trend-line and prices shouldn't go past the trend-line. As long as price is within the trendline then trend is still intact.
The prices should move along the direction of the market trend until such a time when trend line is broken. Once trend line is broken then traders will analyze this as a possible trend reversal because prices are not moving along the support levels or resistance levels provided by trend-line and thus this may mean that the trend is no longer holding.
Drawing an Upwards Trend Line
When the price moves upward it forms higher highs and higher lows forming an upward price movement. An upward trend line can then be drawn by connecting these price higher lows.
To draw this upward trend-line - we use support levels. To draw the upward trend line correctly two support zones are needed.
How Do I Analyze An Upward Trend Line - How Do You Analyze Chart Trends? - How Do I Analyze Trends?
Drawing a Downwards Trendline
In learning how to draw & learning trading analysis of charts, you need to know that when price is moving it forms lower lows and lower highs forming a downward price direction. These are points that are used to plot the down ward trendline.
To draw this downward trend - we use resistance zones and to draw a downwards trend correctly two resistances are needed.
How Do You Interpret a Downwards Trend-Line
How Do I Analyze Market Trends? - How Do You Interpret Market Trends? - How Do I Analyze Chart Trends? - How Do You Analyze Price Trends?
Study More Topics and Lessons:
- What are Top 100 XAU USD Strategies?
- MACD Fast Line Crossover & MACD Center Line Crossover Gold Signals
- Inverted Hammer & Shooting Star Candles
- How to Become a Better Gold Trader Through Gold Psychology
- Gold Margin Calculation Percent
- How Do You Read XAU/USD Charts Beginners Guide?
