Online Foreign Currency Trading

 Market Turns in Forex
It may be quite difficult at times to spot a market reversal as it occurs, due to the fact that market trends may pause many times in it’s climb to the upside / downside. To be certain in our trading decisions, we should try to weigh as many pieces of evidence as possible, before placing the next trade. When the market does in fact reverse direction, the market will provide us with a number of clues indicating such a reversal is in fact, ‘in works’. The following (Daily) chart shows the USDCAD in what appears to be a reversal back to the downside.

Note how the 10-SMA (Simple Moving Average ) initially crossed below the 50-SMA, while the market remained in its upward climbing channel. However soon after that crossover occurred, the market failed to revisit recent high prices, and eventually formed a down trending resistance line, which now runs parallel to its down trending support line. Traders who now believe the market is in the midst of a down trending channel may choose to sell short just below our (new) resistance line, with protective stops placed above and outside our trading channel with the anticipation of lower prices to come in the near future.