Sideways trend or high-risk Forex trading

Sideways trend (flat) is a neutral market trend, which displays a situation on the Forex, in which the price of the traded asset retains a small amplitude of fluctuations in a long timeframe. It can usually be seen against the backdrop of uncertainty about global economic and political trends. With regards to the Forex market, the lateral or neutral trend is always opposed to the downward or upward movement of the exchange rate.

It is also referred to as “side channel” or “horizontal channel” in technical analysis. In fact, it is called such because of the low volatility of the Forex market, that is, insignificant changes in the price of a certain asset (in this case-the traded currency) for a long period of time.

In building of a sideways channel on the price chart must be based minimum on a three points. The borders of the resulting channel (support and resistance lines) will have to be placed horizontally, and the price moves strictly inbetween without forming new highs or lows. This situation that has arisen in the market is often observed either at the end of this trend, or before its continuation.

This kind of trading is to the taste of many traders. After all, it is characterized by the presence of minimal price fluctuations within a given channel, built from the points of local lows and highs. It is very important to correctly perform graphical analysis in order to recognize the end of the sideways trend in advance, otherwise losses may occur.

 

Small note: the trading channel can be confirmed (if the price touched more than 2 times its borders) or unconfirmed (if no touches occurred).

In this case, it is not necessary to define a sideways trend as some kind of anomaly or crisis of the market, because it is actually one of its possible states. An experienced trader is able to trade in plus in any case, and those who are overcome by doubts, excitement or banal inexperience should take the time to open positions.

First of all, if you do not have a clear strategy and vision for further actions, stop trading and wait better than the right moment. Patience is one of the keys to great results!

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