Identify Trends to Predict Forex

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Identify Trends to Predict Forex

• Presented byThe Forex Secret

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Introduction
A series of patterns evolves into what is known
as a trend, which suggests that the latest
movement in the exchange rate is the start of a
longer-term trend that is expected to last for a
certain period of time based on how trends have
panned out previously.
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Contd

• The three types that forex traders look for are

1. Uptrends
2. downtrends
3. and sideways trends

Which, as suggested by the names, refer to which
direction the rate is headed.
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Test the Strength and Stability of Trends When
Predicting Forex

• Ichimoku
• Relative strength index (RSI)
• Average true range (ATR)
• Standard deviation
• Bollinger bands

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Ichimoku

•  Known as Ichimoku Kinko Hyo
• An indicator that identifies trends
• Defines where support and resistance lies to test
  the strength or momentum of the trend.
• Involves a series of calculations
• Forecasts where the levels of support and
  resistance will occure

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Relative strength index (RSI)

•  An indicator of momentum
• Compares the average gain made when an exchange
  rate has risen over a set period of time
• Compared to the average losses made in the same
  period
• Provides an idea of whether a currency is set to
  become overvalued or undervalued

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Average true range (ATR)

•  Measures the volatility of a trend
• Does not identify trends itself
• Compares the highs and lows of an exchange rate
  over a set period of time

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Standard deviation

•  A way of measuring the size of price moves with
  the hope of identifying whether or not movements
  in the future will be more or less volatile.
• Does not identify trends but whether volatility
  will increase or decrease moving forward

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Bollinger bands

•  Sets a band that an exchange rate generally
  trades with the size of the band widening or
  narrowing to reflect recent volatility.
• When a rate moves outside of the band it suggests
  it is about to break higher or lower

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