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How to Tell When a Forex Trend is Ending

3 clues that will help you tell you when a forex trend is ending

Overview

Trend trading is perhaps one of the most commonly used strategies in the forex world. In this lesson 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
Clue 2: Failure to Create a Higher High
Clue 3: Broken Support Levels

The 3 Clues

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.

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.

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.
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