The prices may be generally moving up mmgp forex trend lines an uptrend, or may be moving lower in a downtrend. Sometimes they do nothing at all and meander in a sideways trend. Price is said to be in an uptrend when successive bottoms are higher than the preceding bottoms, as shown below.
Bottom B is higher than bottom A and this sets up the uptrend, which is confirmed only at point C, the third higher bottom. Price is said to be in a downtrend when successive highs are lower than the preceding highs, as shown below. You can see that point B is lower than point A, and again point C is lower than B. A and B established the downtrend, but the third point C confirms it.
Actually speaking Markets are called to be running sideways when there is a lack of an uptrend or downtrend. When prices are ranging or are confined within a band of successively similar tops and bottoms, the market is said to be moving sideways. What are trend lines and how to draw those? During an uptrend, a trend line is drawn by joining the identifiable support points or support zones. During a downtrend, a trend line is drawn by joining the identifiable resistance points or resistance zones.
How do trend lines help us in trading? One can make profits by trading in the direction of the trend until it reverses. You can gauge the reliability of a trend line by applying the following tests. How many times has it been tested? Generally speaking, the line gets stronger each time it has been tested by the price but not penetrated. How long did it hold out? The longer the line held out without being broken, the higher its significance.