A trend is the general direction in which an asset’s price moves over a period of time. Trends can be upward, downward, or sideways and are essential in technical analysis.
Understanding trends helps traders make informed trading decisions by identifying potential entry and exit points. Trading in the direction of the trend increases the probability of success.
For instance, if EUR/USD consistently makes higher highs and higher lows, it is in an uptrend, signaling potential buy opportunities.
Test your knowledge of trends in forex trading with the following questions:
