Trend lines in the trend analysis are difficult for overestimating, since they carry out functions of differentiation of price space on two areas – area in which finding of the price within the limits of an existing trend most possibly and the area price occurrence in which signals about change of an existing trend. The trend lines are the original watershed – crossing by this watershed signals is the trend change. On an ascending trend the trend line is under construction as a support line, and on a descending trend it will call as the resistance line. Really, while on an ascending trend the price won’t cross a trend line (a support line) it is impossible to say that the given trend has ended and has begun descending or lateral trends. Just as on a descending trend only crossing by a trend line (a resistance line) suggests that the descending trend has ended and the ascending or lateral trend has begun.
If demand exceeds offer, the exchange rate on Forex grows. In a return case if than currency volume which other market makers are sorry for volume of currency which market makers wish to sell at the given concrete price more to purchase, the rate falls.
If demand for long time exceeds the offer and causes rate growth (a tendency of growth or an ascending trend) sooner or later it is sated and since some moment the offer starts to exceed demand, leading to currency sale that is expressed in some decrease in its rate – trend corrections.
Trend correction: the movement directed against a direction of the previous trend not surpassing in size previous trend. If to consider a trend as movement caused by change of the factors underlying supply and demand correction is the phenomenon returning the prices in “a correct channel”, not giving to market movement strongly to “be fond and deviate from fundamental factors.
Sometimes this phenomenon can be characterized also as “a profit taking”, designating on an ascending trend that a part of the market makers opening long positions (positions on purchasing), are satisfied by growth of an exchange rate and start to close in large quantities positions – to sell currency on purpose somewhat quicker to fix the profit. However if the basic reasons causing raised demand for currency, haven’t changed, currency purchase renews again, and the rate raises, exceeding the previous maximum value then rate movement acquires a direction or a trend.
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