13 questions about technical analysis that everyone should know, especially traders in forex market.
1. What are the three states of the market?
Answer: Uptrend, donwtrend, and sideways.
2. What is an uptrend?
Answer: Price makes new highs higher than old highs, and new lows higher than old lows.
3. What is a downtrend?
Answer: The price makes new highs lower than the old highs, and new lows lower than the old lows.
4. What is a sideways trend?
Answer: It is the equilibrium of the market, supply and demand are in balance. Price makes equal areas of tops and bottoms.
5. What is a trend channel?
Answer: A trend channel is a set of parallel trend lines defined by the highs and lows of an asset’s price action. A trend channel, also sometimes called a price channel occurs when the price is moving between two parallel trendlines.
6. What is a strong uptrend?
Answer: The trend channel has a steep slope (slope up). During a uptrend, volume increases when the price goes up & volume decreases when the price corrects down.
7. What is a strong downtrend?
Answer: The trend channel is steep slope (sloping down). During a downtrend, volume increases when the price goes down & volume decreases when the price corrects up.
8. When does the trend weaken?
Answer: The trend channel is from sloping to sideways, and at the same time the trading volume is decreasing.
9. Does each timeframe have its own trend?
Answer: That's right.
10. What is the support zone?
Answer: It is a price range that can be considered to buy. It could be an old top or an old bottom.
11. What is the resistance zone?
Answer: It is a price range that can be considered to sell. It could be an old top or an old bottom.
12. When does a trend reverse from an uptrend to a downtrend?
Answer: The price fell below the nearest support area, volume increased at the breakout area, and the price line showed a bearish trend.
13. When does a trend reverse from a downtrend to an uptrend?
Answer: The price rises above the nearest resistance area, volume increases at the breakout zone, and the price line shows an uptrend.
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