Forex Trend Analysis all depends on identifying the start of a new trend at the right time and the end of that what is macd trend before it actually happens. If you can master these two things, you are all set on your way to making a million dollars in the Forex market. Trend is your friend is the oft repeated phrase.
But, this friend is highly unpredictable at the start and at the end. In between, it is very good but you never know it can change direction abruptly anytime to your shock. If you are in a trade and have unrealized profits, an abrupt trend reversal can change those positive profits into negative ones pretty soon.
In fact predicting the start and end of a trend are pretty much the same. What it means is that when an existing trend ends, a new trend starts. But how to predict that the existing trend is ending or is about to end? You can use Divergence patterns coupled with candlestick patterns in predicting the end of a trend pretty accurately.
End of the trend means time to sell. So what is the best time to sell in a trend? Just before it ends so that you make as many pips as possible without losing them. Divergences are considered to be pretty strong signals when it comes to predicting trend reversals.
A divergence pattern develops when the price action is moving up and the indicator is moving down or the price action is moving down and the indicator is moving up. In short, a divergence pattern develops when the price action and the indicator move in the opposite direction.
The indicators that are mostly used are the MACD oscillator, the Stochastic, RSI, CCI and others. In my opinion, the best indicators for divergence trading is the MACD oscillator. MACD is the short for the Moving Average Convergence Divergence. This is one of the most versatile indicators that you will come across in Forex trading.
Use the MACD Histogram with price action to spot divergences. When you spot the divergence pattern, look for the confirmation with the candlestick trend reversal patterns like the bullish or the bearish engulfing pattern. This is one of the most strong trend reversal patterns. There are other strong candlestick trend reversal patterns too that you should master. Once, you confirm the bearish divergence with a bearish candlestick trend reversal pattern, this is the best time to sell and take profit. Good Luck!