Types of market trends
Analyzing market trends is inseparable from the way traders recognize types of market trends. Broadly speaking, the types of market trends are broken down into three, short, intermediate, and long-term trends.
Traders often say, the trend is your friend, so if you want to profit make friends with the trend. The three types of trends are major trends, secular trends, and intermediate trends.
However, this type of trend grouping can be seen in various ways with different terms. Any of these groupings can be seen in this article to the end.
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3 type of market trend based time
All traders agree on the understanding that the psychology of market participants can move the market. In fact, psychology is developing and ending the trends that we will see.
Learning how to identify trends is very important and is the first business concern for every trader who carries out technical analysis. In this group, we classify trends by time.
Primary trend market
The primary trend market is the history of price trends showing either bullish or bearish conditions over a long period of more than one or two years or even more than three years.
In this case, the trader can analyze by relying on monthly or weekly timeframes.
Secular trend market
Secular trends are both bullish and bearish market trends that can last for one to three decades. Secular trends have many main parameters and, for the most part, occur over time in price action charts, for periods of 25 years or more.
However, the condition of this trend will appear as a number of straight lines that move gradually up or down. Secular trends have a longer period of time than primary trends and can be seen with monthly timeframes.
An intermediate trend can occur in a primary trend. Where when there is a bullish trend there will be a time when the price then moves bearish. Although it does not form new lows.
An intermediate trend can occur within two weeks or up to four weeks even eight weeks. Analyzing this mid-trend market, many analyst are trying to find answers to why the market suddenly reverses and leads in the opposite direction to yesterday or last week.
The change in direction to an intermediate trend is partly due to some type of economic or political action and subsequent reaction. History of prices often occurs in strong bullish markets and then the reaction is rather weak. On the other hand when the bearish is strong and then the reaction weakens.
Often in the primary trend, it will form a medium trend several times a wave.
4 Types of market trend based condition
4 type Market Conditions that often occur in the forex market and each one-way analysis will not work on all four types of conditions. Therefore, to make our analysis accurate then every way of analysis is only used in one market condition.
In addition to analyzing certain market conditions also required certain indicators. Therefore the selection of the right indicators can be an important factor in the accuracy of an analysis. Below is a detailed explanation 4 type market trend and how to analyze the conditions:
In this condition, the market moves back and forth horizontally so it usually forms a hallway. Each upper and lower side of the aisle becomes a support and resistance area.
In these conditions the way trading that can be used is by scalping is by buying in the support area and selling area resistance. If the chart is around the support line then the next direction is up, if the chart is around the resistance line the next market direction is down.
So the way the analysis can be used is like this:
- Make a support and resistance line
- Install the stochastic oscillator indicator to provide a ready signal to enter the market
- The entry point is when candlestick forms a reversal pattern and stochastic show overbought/oversold. Or when crossing stochastic.
Break conditions are conditions where the market just destroyed the barrier, so the market power is large. Therefore at break conditions, the price will go very fast.
Thus his analysis will focus on finding the point to enter the market appropriately. The exact indicator of this condition is the Bolinger band and Volume. How to analyze it:
- Install Bollinger bands to see market volatility
- Use the volume indicator to see the power break
- The entry point is when the next open candle is formed, where the Bollinger band widens and the volume of the candle that breaks larger than the previous volume.
A saturated condition is a condition whereas if the market can no longer move further, so the most likely is the market will reverse direction. Time the reversal of this direction if open of new positions with very little risk.
The exact indicator used in this condition is the indicator of the type oscillator Moslem RSI or stochastic. In addition, it can use the money flow index.
The focus of the analysis on this saturation condition is to find the entry point that indicates the market is ready to reverse direction. How to analyze:
- Set the indicator money flow index (5)
- Install the stochastic oscillator
- The entry point is when stochastic is under 20 or above 80, and MFI is 0 or 100.
- Use indicators, such as MFI or stochastic
- Convergent is when the graph becomes lower but the indicator becomes higher, or the graph rises but the indicator lows.
- The entry point is when the next open candle is formed after convergence occurs.
6 Types of trend market-based volatility
Price volatility in a trend can provide better opportunities when conditions of volatility are high. Because in this condition the price movement becomes faster and the trader does not have to wait long to make an order and close the order.
However, it should be noted that high volatility can also pose a high risk, so traders should estimate the size of a safe position.
Bullish Volatile depicts a strong uptrend, under these conditions a very short counter trend occurs, so long positions are the first choice. How to determine the target there is a trader who uses stop loss in profit so he will look for when the trend has weakened.
But some are still using fixed targets in accordance with the specified risk-reward ratio.
Price volatility in the uptrend is very low, although the trend is an uptrend, there is often a counter trend that appears, so the uptrend is very slow. In this condition, there are targets set by traders who choose to hold as swing traders, but there are also those who determine the exit when the price is in the high area.
Overall analysts will choose the buy option in the low trading volume in this bullish quiet.
Sideways trend describes the condition of the flat, wherein this type of trend prices usually move within a certain range as the price limit is the highest and lowest point.
The price range between the highest point to the lowest point indicates high price volatility when the price is far enough, for example, 50 pips.
In this volatile market sideways traders tend to choose the buy at low and sell at high options by placing a stop loss above the highest or below the lowest.
This is a really flat trend, in this condition, there is almost no volatility, price movements are very low, and as if there is no movement.
In this trend condition, it is very difficult to be able to make effective trading, so analysts will tend to leave the market.
Bearish describes the condition of a downward trend, while volatile describes conditions where price volatility is very high. This condition is similar to what happens in a Bullish volatile tend.
it only differs in the direction of the trend, where bullish volatile is in an uptrend while bearish volatile is in a downtrend. How to trade is to select the Sell option and determine which targets use fixed targets and others use trailing stops.
Quiet describes the low volatility, although overall the trend is bearish, but the price movement is very slow, so if we draw a trend line it will appear to be more sloping than bearish volatile.
Knowing or learning about the concept of market trends is very important to all traders. This is because market trends play a major role for traders in capturing opportunities to profit from price changes in a market trend.
Types of market trends can indeed be analyzed based on several points of view, but in practice still requires a more detailed understanding of understanding the concept of trends. When will the new trend begin, and when it will end.
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