Definition – What does Trend mean?
A trend is a continued directional movement in the price of a currency pair. The trend is the direction established by the price action in the market. There are three basic directional trends in forex:
- Uptrend: The currency pair is seeing an overall increase in value
- Downtrend: The currency pair is seeing an overall decrease in value
- Sideways trend: The currency pair is fluctuation up and down in value in relatively equal amounts.
ForexTerms explains Trend
Although the concept of a trend is simple, identifying a trend is one of the biggest challenges for currency traders. Trends can be short-term, long-term, macro, micro, false and on and on. Any trend is influenced by fundamental factors combined with the technical factors introduced by market participants reacting to the fundamental and technical signals. Each trader develops his own system of identifying trends as he tweaks his trading plan and trading strategies.