The Four Stages in Forex Trading Trends

The foreign exchange market operates continuously for 24 hours, with ups and downs, and never stops. Its trend is like the day and night transformation on the earth, and it goes round and round. Correspondingly, we can divide the market trend of the exchange rate into four stages: bottoming, rising, topping and falling. We can judge these patterns by observing the exchange rate chart, such as the commonly used K-line chart.

1. The bottoming stage. Exchange rate bottoming patterns generally include triple bottom, head shoulder bottom, double bottom (W bottom) and semicircle bottom (pot bottom). The larger the horizontal construction area at the bottom, the more kinetic energy accumulated in the rise and the greater the rise. At this stage, the range operation of buying low and selling high should be carried out. If you are conservative, you can give up the profit opportunity at this stage and move to the next stage.

Second, the rising stage. When the exchange rate breaks the neckline of the previous bottom, it indicates the beginning of a round of upward trend, and the height of the rise is generally the vertical height of the previous bottom. This stage is like a young man with plenty of physical strength, desperately rushing forward and running far and jumping high. Although he has no endurance, he can start again as long as he takes a rest when encountering difficulties. It is like the main stage of the rising market. It is big and fast. Although it lasts for a short time, if you encounter upward pressure, you can immediately start a new round of upward attack as long as you make a slight retreat. The initial period of this stage should be the best time for us to bravely pursue buying. The rising stage is also the main source of our profit.

Third, the stage of building the head. It is the later stage of ascent. At this time, the market trend tried to push up again, but the bulls tried their best to break through the previous high point, and finally broke through the neckline to complete the head and entered the decline stage. At this stage, the medium and long-term buy orders in the early stage should be sold, and the short-term can try to do fast-in and fast-out range operations.

Fourth, the decline stage. It's the same as the rising phase, but in the opposite direction. At this stage, people's hearts are scattered, the exchange rate is unable to support, and the rate of decline is rapid until the kinetic energy disappears and enters the bottoming stage. In the falling stage, you should resolutely kill the decline, and stop the loss quickly, otherwise the loss will be huge.