Currency Trading Trend Types - Downtrend Patterns

Downtrends are downward patterns that are recognized through technical analysis in the bearish market.

When you try to examine a chart for downtrends, always look at the big picture, and ignore what we in the currency trading business call "noise". These are the small ups and downs that occur to the currency price. A good trader needs to be able to look past such interruptions and focus on the general and major trend that is occurring, and if it is a downtrend then traders should not consider small rises in the price of the currency as a definite sign for a change in trend direction.

A downtrend can be drawn between any two currency trading prices, even though the preferred case is to draw for as many points as possible. Many people that invest in trading currency, force their own beliefs on the currency direction when they analyze downtrends and other trend types, and this behavior should be avoided. It has occurred that traders that relied on downtrends were able to recognize them in charts that displayed apparent and clear-cut cases of uptrends.

Downtrends are only one example for currency trading trend patterns, and to become a great investor you should get to know at least the most important ones.

Posted by Paul Sander