Posted by forex at 6:53 AM
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1. Open an intraday chart of the Forex currency pair you are trading. Choose a chart that shows you the price history over the past one or two days. The five minute chart is a good one to use for this step. You may use any kind of chart as long as the full chart encompasses one or two days of price history.
2. Study the price action. If prices are making successively higher highs and lows, the trend is bullish, or upward. If prices are making lower highs and lows, then the trend is bearish, or downward. If prices are moving sideways within a narrow range, the market is said to be flat or channeling. On the other hand, if prices are swinging up and down within a range, there is high volatility, but no definite trend.
3. Plot a moving average on the chart. This is a way to smooth out price action and determine the trend at a glance. The more periods you include in your moving average, the more it will smooth out the price action. Once you've plotted the moving average, look at the slope. If the slope is positive, the trend is up. If the slope is negative, the trend is down.