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The Daily Trend is a Powerful Trading Tool

The Daily Trend is a Powerful Trading Tool

Richard Krivo, Trading Instructor

Instructor's Response:

You have made some good observations.

However, remember that the direction of the Daily trend is the strongest "tool" that we have when deciding the direction that we should trade a pair. It is stronger than any indicator that can be employed.

With both the RSI and the MACD giving bearish signals (the RSI is solidly below 30 and the angle and separation is increasing between the MACD and the Signal line), the higher probability trade will be to wait for the pair to retrace and then take a short position back in the direction of the downtrend. 

While what you suggest could occur, the greater likelihood will be for the downtrend to continue.

chart 12 03 09

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.