Forex Focus: Surviving The Trappings Of Trends by Cornelius Luca
Faced with a choppy trend? Here’s how to analyze a
trend and identify some realistic opportunities.
dream and promise of trends! Traders
rightfully seek and try to follow them. However, staying with the trend is not for the fainthearted,
and unless you are Warren Buffett or have
similarly deep pockets, you may not be able to survive
the experience. The average trader will have to learn to
shift between both short-term and medium-term strategies,
and the long and short directions, regardless of the
direction of the major trend.
Trends are sustained directions that last a minimum
of five weeks or so, and a long-term trend will last more
than a year. While buying near the lowest levels and
selling near the top is always a nice fantasy, let’s analyze
a trend and identify some more realistic opportunities.
OPPORTUNITIES IN TRENDS
Figure 1 shows the euro/dollar pair rising between the
middle of November 2005 to late May 2006. This
medium-term uptrend was the initial rising leg of the
trend that formed between November 15, 2006, and
January 23, 2007, a pullback between January 24, 2007,
and February 27, 2007, and the second rising leg between
February 28, 2007, and May 15, 2007.