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Is This Trend or Correction for Dollar, S&P 500, EURGBP?

Is This Trend or Correction for Dollar, S&P 500, EURGBP?

John Kicklighter,

Talking Points:

• All freely floated markets move with shifting trends, with corrections and ultimate reversals

• Distinguishing between trend and correction is best served through technical and fundamental analysis

• We look at the recent rallies for the AUDUSD, S&P 500 and EURGBP as well as the USDollar slide in this context

Want to develop a more in-depth knowledge on the market and strategies? Check out the DailyFX Trading Guides we have produced on a range of topics.

No market moves in a straight line. Trends are interspersed with periods of correction which charge debates over whether true reversals are underway. Establishing whether we are trading with the prevailing wind or one of the temporary periods of reprieve should dictate a lot about the approach we take. In periods of corrections/retracements/'noise'; trading time frames should be shortened, objectives placed more conservatively and our confidence level cutoff should be significantly higher. Conversely, when placing trades that follow the prevailing trend; considerations of time, objective and stringent entry criteria can be relaxed. How do we differentiate correction from new trend? We discuss that in today's Strategy Video using the S&P 500, Dollar, AUDUSD and EURGBP to illustrate.

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