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One of the major instruments of the trader are trend models, despite of their simplicity (a trend – the directed movement of exchange).

Before the analysis of trend lines and models we will remember one of work key rules – “the trend is your friend”. If you have wanted to make operation against a trend be ready to any unexpectedness. Try not to work against a trend. The temptation to work on corrections against the basic trend usually is very great, but often leads to severe losses.

Certainly, not any rule can be applied recklessly. And the basic restriction for the above-stated rule consists that if you apply it in the end of trend life cycle you risk to remain in minority before the huge market and to lose money. However, while the trend definitively will not turn, you will not lose much.

Your primary goal at the analysis of trend lines and models will be not only revealing of a direction of a trend, but also its life cycle. For simplicity of an explanation I will make estimation, characteristic for average life cycle of a trend.

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The direction of dynamics of a trend can be advanced, having analyzed following indicators:

- Classical trend lines and models;

- Dynamics of simple and difficult averages;

- Dynamics of linear MACD;

- RTR line;

- Lines of Bollinger;

- The indicator +/- DM.

Having summed up all conclusions from the analysis of the given indicators and having rejected false signals, it is possible to receive a pure direction of a current trend and to estimate in what period of life cycle is the analyzed price for the goods now.

Resistance lines and supports are the base of classical trend analysis. All trend lines, models and figures are only combinations of lines of resistance and support. Occurrence of the given lines has a following logic explanation:

The resistance line connects the important maximums (tops, peaks) of the market. It arises during the moment when buyers more either cannot, or do not wish to purchase the given goods under higher prices. Simultaneously with each movement of the price resistance of sellers upwards accrues and sales increase that also puts bearish pressure upon the price. The trend upwards is stopped and as though rests against an invisible ceiling, which cannot punch at the moment.

The support line connects the important minima of the market. Occurrence and existence of lines of support is oppositely about what I spoke about a resistance line. Sellers are active players in the market which push out the price downwards, and buyers thus – the defending side. Than sellers will be more active and the buyers more passive, the higher probability of that level of a support line will be punched also and the price will go further downwards.

If both the line of resistance and a support line are strong enough and also are kept for long, depending on their combination there are various images and associations, which entitle trend models and figures.

To make lines of resistance and support it is better through zones of a congestion of the prices, instead of through their maximum emissions at tops and bottoms. The mass congestion of the prices shows that here the behavior of advancing quantity of traders changed the direction, and the maximum emissions of the prices in such places testify to panic behavior of the weakest market participants hastily closing the unprofitable items.

The method of the analysis of resistance and support lines helps traders to monitor tendency change – its turn or strengthening. These levels are especially important for statement of protective stop loss orders.

It is a must to gather as much info about Forex as possible. Because this info will help you not to lose much money on Forex trading or Forex investment.

Surely not a single piece of knowledge can be rock solid guarantee against losses, especially on Forex, but sometimes just one Forex books can save you much money.

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