Shenell17

The Three Great Trend Trading Cycles

OANDA:AUDNZD   Australian Dollar / New Zealand Dollar
Hey Trading family! In this education post I'd like to share with you my observation of the 3 cycles that create the uptrend and downtrend.

First, trend refers to the natural movement of price action. You may know this has highs and lows. I say we dig deeper.

Highs and lows are referred to as the highest price a buyer could buy a currency while a low is the lowest price a buyer could buy a currency. This is on the consumer side.

On the trading side, a high is the highest price you'd sell a currency pair and a low is the lowest price you'd buy the currency pair.

I say we dig deeper here. There are 3 cycles that create the legs of highs and lows of a downtrend.

Cycle 1 - Trend Continuation
In an uptrend you're more than likely to become the buyer. The reason being is because you will likely see when price fluctuates up you will make more money and the move up more visible than the move down.

The flow if price naturally moves up continuing the push up to new highs thus in an uptrend we get higher highs.

In a down trend you'd more likely become the seller The move down is more visible.

The flow if price naturally moves down continuing the push down to new lows thus in a downtrend we get new lower lows.

Cycle 2- Retracement
A retracement is also called the pullback or correction. This is a sign the momentum or strength in the trend continuation movement will relieve itself and pullback.

In an uptrend after a new higher high is formed, price will pullback to form a higher low before continuing back up.You can then become the buyer again.

In a downtrend after a new lower low is formed, price will pullback to form a lower high before continuing back down. You can then become the seller again.

Cycle 3- Reversal
A reversal is the trend switcher. This is not to be confused with the retracement.

Reversals switch the full flow of price. An uptrend becomes the downtrend and a downtrend becomes an uptrend.

How to know when price has reversed?
Easy! It's not a trend line break . It's not a level break!

In an uptrend, when price moves down past the last higher low that was formed, that signals the sellers have come into the market or the base currency has lost value and price will begin decreasing.

In a downtrend, when price moves up past the last lower high that was formed, that signals the buyers have come into the market or the base currency has gained value and price will begin increasing.

Best part to remember is this...
An uptrend or downtrend is only made of the trend continuation and retracement cycle.

You won't see price reverse much on higher timeframes such as the daily, weekly, and monthly. So don't expect to see price reverse every week or month.

Simple right?

Go try this out for yourself. If you have any questions or would like to share helpful value please post it below. 😁

Thanks for reading❤️

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