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WEBVTT
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What is a trend? The trend is simply the direction of the market,
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so which way the currency pair is moving.
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But when you have a look at the chart, the first thing that you notice is that there is no straight
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line to help you to identify any direction.
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You never see something like this, but you can see something like this. Even if it is quite obvious that
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the price is going up,
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How can you say that? Let's analyze this example.
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You need to have a look at the highs and lows that are formed on the market. In this example, we start
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from here
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and the price goes up before having a change of direction.
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So just focusing on these three points, we can say that the first one is the first low.
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Then the price reaches a high and then it goes back to form a second low.
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Then it starts to go up again and we have a new high.
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And then at the end we have the price that forms the third low.
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Now, are these highs and lows growing?
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Yes.
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The second low has a higher price than the first one and the third low has a higher price than the second
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one.
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The same thing for the highs.
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So you can say that the price is not going up as a straight line,
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but, overall, the price is going up because new highs and new lows are higher than the previous ones.
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This concept defines an uptrend. When new highs and new lows are always lower than the previous ones,
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we have a downtrend.
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We also have a third type of trend, that is the situation when the price is not going up but it's not
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even going down.
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This trend is called Sideways trend.
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In this situation the price moves in a range that is defined by a support at the bottom and a resistance
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at the top.
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