The trend is considered the most reliable indicator, that traders can use in future price analysis. It can offer you a win rate of up to 80% during trading.
The price trend is a direction of the price over a certain period of time. After determining the price trend, you can find out the next movements of price. Then you can get an accurate idea of its behavior.
In general, prices can have three types of trends.
Sideways Price Aka Sideways Trend (Taking Most Of The Time During A Session)
Prices create peaks and troughs that are equal or nearly equal within a given time frame. Also prices may have various strong and weak fluctuations but they will go sideways. Often during this trend, we should only trade with some reversal strategies.
Bullish Price Aka Uptrend
With this trend, the following peaks and troughs are higher than the previous ones respectively. Troughs will be reversal points in preparation for making new peaks.
Bearish Price Aka Downtrend
Unlike an uptrend, the next peaks and troughs are correspondingly lower than the previous ones. Peaks will be reversal points in preparation for making new troughs.
How To Identify A Change In Price Trend
Changes in the trend can vary as follows::
- Uptrend (or Downtrend) => Sideway.
The following peaks and troughs are higher than the previous ones, when the price is in an uptrend. But when an uptrend is over, the following peaks and troughs are equal to the previous ones. This means moving from an uptrend to a sideways one.
It is the same for a downtrend.
- Uptrend => Downtrend and vice versa.
This is a sign of price reversal.
For example, After a downtrend, the following peaks and troughs are higher than the previous ones respectively. An uptrend is formed.
- Sideways trend => Uptrend (or Downtrend).
This is a price break out, also known as a break out of levels which creates a trend.
Binomo – Trendline
Trendline it means when the price is in an uptrend or a downtrend, the line connecting peaks (in a downtrend) or troughs (in an uptrend)
This is a line with a large number of applications in trend trading in Binomo. However, in a price trend, we cannot always draw this Trendline. So if, the Trendline is available, consider it an ideal condition for trading.
How To Trade With Price Trends
The principle of this strategy will be identifying the main trend (uptrend or downtrend). Then, wait for signals to confirm the continuation of the price trend.
Let’s take a closer look at the following 2 examples to identify special Candlesticks and candlestick patterns.
- Prices in an uptrend: Only open UP orders. Prices in a downtrend: Only open DOWN orders.
- Open orders of 15 minutes or more using a 5-minute candlestick chart.
Regarding An Uptrend
Open UP orders = Uptrend + bullish reversal candlestick patterns (Bullish Pinbar, Morning Star, Bullish Harami, etc.).
Regarding A Downtrend
Open DOWN orders = Downtrend + bearish reversal candlestick patterns (Bearish Pinbar; Evening Star; Bearish Harami, etc.).
Trendline or price trends are extremely good tools in trading. Practice with trends on a demo account carefully to have the best experience. In the following articles, we will build advanced strategies with this indicator.