We will look at examples of trends.
These come in three forms: upward, downward and sideways. When
looking at trends, however, time frame tends to take on a greater
level of importance, so in each asset example, we will look at trend
activity from specific time perspectives and make note of those time
intervals used.
Uptrend Examples
Typically, “uptrends” are defined
as price activity that shows a seriesof higher price highs along with
a series of higher price lows. In these cases, highs and lows can
also be referred to as support (price lows) and resistance (price
highs). Here is an example of an uptrend in the price of oil, with
each price interval showing a span of 4 hours:
Next, we will show an example of an
uptrend in the EUR/USD, also using a 4 hour chart:
Finally, using a stock market
example,we will look at an uptrend in the S&P 500, this time from
a daily perspective:
So, when looking for uptrends, the main
point to remember is that they can be seen on any time frame or in
any asset class. The most important requirement is that higher highs
in price are visible along with higher lows.
Downtrend Examples
Alternatively, “downtrends” are
defined as price activity that shows a series of lower price highs
(resistance) along with a series of lower price lows (support). Here
is an example of an uptrend in the price of oil, shown on a daily
chart (each price interval is equal to 1 day):
Next, an example of a downtrend in the
USD/JPY currency pair, using a 4 hour time frame:
Last, we see an example of a downtrend
in stocks - with an hourly chart of the Nikkei 225 index:
In each of these cases, traders should
be looking to identify the general trajectory that prices are
following.
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