3 Simple Steps To Predict A Change In Market Trend 80% Of The Time

If you are one of those forex traders, probably new to the forex trading and wonder how you can  predict a trend, the following 3 simple steps will help you predict a trend change.

A warning: you wont be getting 100% success rates in predicting trend, but maybe up to 80% of the time anyway. The key thing is you need to use it as a system and not as a bible.

The advantage of this 3 step method to determining a trend change is that it allows you to have a system where you can identify trend changes at least 60%- 80% of the time.

 

Want to know what these 3 step processes are:

  1. Trendline is broken
  2. Retest and failure
  3. Price falls below the  prior low

Lets me get into more finer details…

 

Step 1: Trendline Gets Broken

Its pretty simple…when a trendline gets broken it indicates that the current trend is most likely over. Currency pairs will often break trendlines. Sometimes, that means the trend is over. Sometimes, it will break it and and continue in the prevailing trend. So how the heck do you know if a trendline break is really the end of a trend? Well let’s get to step 2 shall we? But first, look at the chart below…this is what a trendline breaks looks like:

Forex Trendline Break

 

Step 2: There Is A Retest And A Failure.

When  a currency pair is in an uptrend, it makes higher highs and higher lows. So when this currency pair fails to doe this, you should now go ” aha!” and begin to take a step back and ask yourself: is this trend going to end?

Here’s the thing: the currency pair has now tested that prior high but it has failed to continue to make higher highs.

Now, the third step below is the final one. But look at what a Retest and a failure forex chart looks like:

 

Retest Of Trendline

 

 

Step 3: Price Falls Below The Prior Low

So now, a currency pair that is in an uptrend is no longer making higher highs (in step 2). So what do you watch for next?

Simple…

Wait to see if price falls below the prior low.

When the currency pair has fallen below the prior low, then you have confirmation that the trend has changed.

Why?

Simply because now the currency pair is making lower highs and lower lows.

Do you know what the definition of a downtrend is? Its downtrend is defined as when a currency pair is making lower highs and lower lows!

Ok,  so here’s what it looks like when price falls below the prior low:

Price Falls Below Prior Low

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How This Knowledge Can Help You As A Forex Swing Trader?

  • sometimes, you have to be careful about trading trendline breaks (thinking that the trend has ended…). Its not that you should not trade trendline breaks. In fact you can trade trendline breaks.
  • But after a trendline break, it is good to sit on the side and wait to see if price retests the trendline that was broken and then if that fails then the next step would be to….
  • watch if price breaks the previous/prior low.
  • now, the real advantage of this knowledge is that its better to trade a currency pair at the very beginning of the trend change…why?
  • Because you get in early at the start of a trend, then there’s a great chance of the forex currency pair making big moves which means more profit for you. That’s the great advantage of you getting in early.
  • And the 3 steps of predicting trend change can allow you to do that.
  • Finally, don’t be a jerk, for all this free forex trading tips and information I am providing, can you at least say thankyou by clicking those like and share buttons below?

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2 Responses to “3 Simple Steps To Predict A Change In Market Trend 80% Of The Time”

  1. gabriel says:

    good job…i will start to study about swing trading…

  2. percival says:

    Great information. Thank you very much

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