Now, when you are familiar with The 2/1 Rule, The 5 Percent rule and understand the Trading Self Check importance, the Professional trading will proceed with the Trend analysis.
It’s always important to understand what is the direction of a market raw – is it going up or down is on the consolidation stage.
Trend analysis
Have a look at a sample of a week chart reflecting the USD to Japanese Yen within a period from 2007 till 2008. Several technical analysis indicators are applied to illustrate the trend: RSI, slow stochastic.
The red arrow that is going down is pointing at periods of market trends. You may decide to open a short position for the US Dollar and a long one for Yen. It shows you how easy it is to sell and buy on forex, whereas it’s not that easy for other markets, including the stocks market.
