forex day trend prediction

Discussion in 'Forex' started by Ashini, Jul 17, 2013.

  1. Ashini

    Ashini

    How long does it take or how do we get to know the day trend of a currency pair?
     
  2. Jason Rogers

    Jason Rogers ET Sponsor

    Hi Ashini,

    Welcome to the forum :)

    While there's no way to know to be 100% certain which direction a currency pair will trend on a given day, traders will sometimes use pivot points as a guide to decide whether they should look buy or sell a currency pair. The classic method for calculating the pivot point for today is to add up yesterdays High, Low and Close price and divide by 3. For example, yesterday's High, Low and Close for EUR/USD are as follows:

    High: 1.31772
    Low: 1.30820
    Close: 1.31237

    If we take the average of those 3 prices we get 1.31276 as today's pivot point. On the 15-minute chart below, you can see this pivot point as a the purple horizontal line.

    [​IMG]

    Since the price is currently trading below the pivot point, this is a signal for traders to look to sell the pair. Again, pivot points don't work all the time and are just one indicator of trend. Others popular indicators of trend include moving averages.

    Jason