Trends

A trend is a general direction in which something is developing and in the well-known cliché initiated by George Lane, ´The trend is your friend´.

In the graph below (USDJPY, 28th Feb-3rd March, 15 mins) we can see that the trend is veering downwards:

 Downward trend

It is important to ascertain the trend in a graph and as a general rule, is prudent to trade with (not against) the trend. For example, in channel trading, it is tempting to buy at the line of support and sell at the line of resistance. This however does not account for the trend. In a situation like the line above, one should really only sell at the line of resistance and not seek to trade upwards. Look at the arrows on the graph, we can see here that the price did not have the energy to overcome the downward momentum . When a price is channelling against the trend, there is a tendency for the price to move sideways, not up or down. There is a large difference between the pips to be gained with or against the trend.