tailieunhanh - Forex Strategies for High and Low Volatility Markets_2

Tham khảo tài liệu 'forex strategies for high and low volatility markets_2', tài chính - ngân hàng, đầu tư chứng khoán phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | MASTERING THE CURRENCY MARKET conversely an uptrend means higher lows higher highs and higher closes. One way to define a trend is by drawing trendlines as shown in Figures 5-3 and 5-4. We draw support or up trendlines by drawing a straight line connecting the higher lows and extending it into the future. We draw resistance or down trendlines by drawing a straight line connecting the lower highs and extending it into the future. In trading it is the market that defines our decisions or parameters and it is trendlines that define the market s parameters. Trendlines are a favorite tool among traders for a very good reason Markets respect them. Uptrends or bull trendlines act as areas of support. Downtrends or bear trendlines act as levels of resistance. Trendlines have to be updated as the market moves through time and they can be used for Figure 5-3 Support Line Connecting Isolated Lows 84 SUPPORT AND RESISTANCE Figure 5-4 Resistance Lines Connecting Isolated Highs both trading and forecasting. In drawing trendlines on candlestick charts we also have the option of drawing them from the highs and lows of the wicks or from the highs and lows of the bodies. Figure 5-5 shows a monthly chart of GBPUSD with all significant support and resistance levels and trendlines marked. Note how in the summer of 2008 the support level that had built up through the first half of that year gave way. It is essential that a trader monitor significant levels like this and be aware of the possible market consequences for price when a major level is breached and price closes beyond it. This price breakdown was followed by penetration of the long-term bull trendline and a major sell-off followed. 85 MASTERING THE CURRENCY MARKET Figure 5-5 Support and Resistance Levels on a Monthly Chart In this figure we can see from the pattern of higher highs and higher lows from 2002 through 2007 that the trend is higher. We also can see that just above the level supply started to exceed demand .