Posted by forex at 5:22 AM
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1. Open any Forex charting application and chart the currency of your choice. In most programs, this involves selecting from a list of available currencies or typing in the ticker symbol for the desired currency, and then pressing the 'Chart,' 'Go' or 'Enter' buttons.
2. Set the duration of the chart to 'Daily.' This will show a new bar on the chart for each day.
3. View the chart and identify its 'highs' and 'lows.' A high is an obvious peak in prices over any period of time, while a low forms a valley on the chart as prices fluctuate.
4. Compare consecutive highs and consecutive lows. A trend is a pattern of higher highs and higher lows. This means that if a high is higher than its previous high, and the low immediately after this high is higher than the previous low, an up trend is in effect. Since this is a daily chart, such a pattern shows a long-term trend, taking place over many days, weeks or even months.
5. Change the chart to hourly or minute-based charts, such as a 30-minute chart, or even 5-minute chart.
6. Compare the highs and lows on this chart in the same way and identify if a trend is in effect. If each high is lower than its previous high, as is each low, then a down trend is taking shape over the course of the day. Note that a down trend throughout a day can easily occur in a long-term up trend. Some investors may seek down trends to enter the Forex market for profits over the long-term, since their entry price could be lower than when entering during an up trend on the small time frame.