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January 12, 2022

How to Tell When a Forex Trend is Ending: 3 Clues!

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Trend trading is perhaps one of the most commonly used strategies in the forex world. In this article we will be sharing tips on how to determine the end of one forex trend and the potential start of a new one. We will share 3 specific clues that you should be looking for when trend trading that will help improve your entries and exits.

Clue 1: Trend Line Break

One of the first indicators that a forex trend is ending is a trend line break. Taking a look at the chart below, you can see that there are multiple points throughout this bullish trend where price was supported by the bulls. Throughout this trend, the pair continued to form higher highs and higher lows which proves price to be strong. However, at some point this forex market was ready to start heading south. At this point, circled in the image below, buyers were no longer able to buy this market higher. This was the first time throughout this trend we see a pullback which is not supported by the bulls, showing that the market is likely ready to reverse.

How to Tell When a Forex Trend is Ending!
The first clue that a forex trend is ending is a trend line break.

Clue 2: Failure to Create a Higher High

After a trend line break, the first sign that a forex trend is ending, we see a bullish push back that fails to meet higher highs. Throughout the bullish trend price continued to reach higher highs. However, after the initial trend line break we see lower highs beginning to form. Thus, indicating that bears are pushing the market back down.

How to Tell When a Forex Trend is Ending!
The second clue that a forex trend is ending is a failure to meet higher highs.

Clue 3: Broken Support Levels

Finally, we see this level of support, which has held for many weeks get violated and broken beneath. Price eventually dropped below a significant level of support showing that sellers have control of this market.

How to Tell When a Forex Trend is Ending!
The final clue that a forex trend is ending is broken support levels.

How to Use A Forex Trend To Your Advantage

Looking back, we had 3 major clues that this trend may be headed to the downside. these clues are possible things you can look for to potentially find the start of new trends or the end of a trend. We had a bullish structure and when we saw this structure break it gave us a clear indication that sellers may have some room to run. Our second indication was the forming of a lower high. Finally, there was a break of structural support. With this information about trend trading, we could have identified the series of lower highs and potentially taken a short position.

Watch The Video: How to Tell When a Forex Trend is Ending!

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DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
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