Summary : Forex Trends

A forex trend is broadly defined as the direction in which a currency pair is moving. Currencies usually do not rise straight up, nor do they fall vertically down. It is more common for them to retrace some of their decline or advance, before continuing in the direction of the original forex trend. Each forex trend, therefore, consist of a series of price thrusts in its direction and price reactions contrary to it ( which are also called retracements, corrections or pullbacks). Trends are differentiated by their direction and by their duration.

Currency trends are divided into three types according to their direction - uptrend, downtrend and sideways trend. In an uptrend each currency price thrust reaches a higher level than the one before it and each currency price reaction stops at the level higher than the preceding reaction. In a downtrend every price thrust reaches a lower level than the thrust before it and every price reaction stops at the level lower than the previous reaction. In a sideways market both price thrusts and price reactions don't substantially exceed their previous counterparts.

Forex trends are also divided into three groups according to their duration - major, intermediate and minor trend. Major forex trends last from one to three years. Intermediate forex trends continue form three weeks to three months. Minor forex trends are completed in less than three weeks. 

Major forex trends are best viewed on the daily charts, intermediate trends - on the hourly charts and the minor trends - on the 15-minute charts. Major trends are formed by the intermediate price thrusts and reactions, each of which are intermediate trends. Intermediate trends are in turn made up of minor price thrusts and reactions, each of which are minor trends.