What is a trend?

A trend is simply the direction in which a price is moving. Prices don't normally move straight up or straight down but in peaks and troughs. If the peaks and troughs are in an upward direction, this means an up trend and vice versa. The breaking of a trend line usually signals the reversal of a trend.

Trends are often classified into 3 categories:

• Bull trend = up trend. A series of highs and lows where each high is higher than the previous one.
• Bear trend = down trend. A series of highs and lows where each high is lower than the previous one.
• Treading trend. A series of highs and lows more or less remaining at the same level.

Of course, being successful in Forex trading means that you have to be able to identify trends. More about this in tomorrow's post.

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