EC foreign exchange trend line trading reference and practical skills

As the saying goes: "If you want to do something good, you must first sharpen your weapons". existEC ForexIn trading, the use of charts for analysis can help us intuitively understand the evolution of past trends, and then rationally predict the future trend. Trend lines, as a common chart analysis tool, although simple, it has practical value. The concept is: in an uptrend, the low points of two or more rising waves are connected into a straight line and extended, which constitutes an uptrend line; in a downtrend, the high points of two or more falling waves are connected into a straight line and extended, which constitutes a downtrend line.

The theoretical basis of the trend line is that if the price trajectory remains above the uptrend line, the long position can continue to be held; once it falls below the uptrend line, it is regarded as a trend change and should be considered as a short operation. Conversely, if the price trajectory continues to drift below the downtrend line, the short position can continue to be retained; when the price crosses the downtrend line upwards, it is regarded as a buying signal and should be turned into a long direction.

In ECforeign exchange marketThe price trend is determined by the outcome of the game of power between buyers and sellers. The chart is essentially a dynamic "record of the battle". When the buyer's power has the upper hand, the chart shows the trend of one wave higher than the other. When the seller has an overwhelming advantage, the chart shows the trend of one wave lower than the other. The corridor area above the upward trend line is the inertial movement direction of "one wave higher than the other".

The channel below the downtrend line corresponds to the inertial motion path of "one wave lower and one wave lower". If the price falls below the uptrend line, it means that buying sentiment has turned from boom to bust, and the inertia of "one wave higher than one wave" has been broken, thus becoming a sell signal. On the contrary, if the price breaks through the downtrend line, it proves that the selling pressure has turned from strong to weak, and the trajectory of "one wave lower than one wave" has reversed, thus becoming a buy signal.

However, buying and selling based solely on the signals given by the trend line is too simple. After all, it is a relatively simple job to connect the lows or highs of two or three waves into a trend line. Too simple methods often fail to generate high returns, and most of the traders who trade against the trend line are newcomers.

Therefore, the big money in the market often regards investors who believe in the trend line as potential targets, deliberately creating an illusion of breaking the line, setting up chart traps, and then quickly reversing after the investor follows up, so that the loss is unknown. Therefore, even if the chart shows that the price breaks through the downward trend line or falls below the upward trend line, it is necessary to comprehensively consider the supply and demand relationship, economic policy, macro environment and other factors at that time.

Observe whether the fundamentals are really bullish or bearish, so that it is not easy to be misled by "fake breakouts". If fundamentals and other technical indicators (such as strength index, volume and price analysis, wave theory, etc.) are in line with trend line signals, then it is better to enter the market decisively.