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Home  >  Technical analysis  >  Trend analysis  >  Forex Channel and Trading range

Forex Channel and Trading range

Forex trading is indeed the greatest of all investment markets in the world, but at the same time, it happens to be the most volatile investment place as well. The fluctuations experienced by the world currencies are capable of changing the fate of investors overnight. If experts are to be believed, the pictorial representation of these fluctuation, popularly known as forex channel and trading range, is a competent way to get familiar with trends followed here.

Significant Situations to Use these Tools

Forex channel and trading range are efficient tools for evaluating your investments in different situations. These tools become extremely helpful in two main situations, as listed below:

1) First and foremost, these representations are helpful in situation, where the market has recently experienced a strong fluctuation. This is the time, when you want to take correct decision for your investment and these tools help you in this.

2) nother situation of using these tools is when the market is in the process of recovering from a strong move to transit to next level.

How the Channel is created

In order to understand the concept of forex channel creation, it is important to view it diagrammatically. Here is the representation of a forex channel, borrowed from Forex Realm.

The two parallel line, support line and resistance line are helpful in depicting the fall of currency of appreciation of the same in different situations. An important point to note here is that area between these two parallel lines is called the trading range, which helps an investor to decide his or her range of forex investments.

The channel is created by marking lines for prices at high trading points and those for prices at low trading points. The time period for which the market is analyzed to create the forex channel is an important factor for deciding its efficiency.

What is Forex Channel Breakout?

As it is clear from the name, a channel breakout associated with forex trading occurs when the prices of any of the currencies participating in forex trading breaks the limits set up by lower line and upper line. There could be an upward channel break or downside channel break, depending upon the situation.

Due to uncertainty prevailing in forex market, it often becomes difficult to earn big profits during upward channel break and save your investments from loss during downside channel break. However, you are expected to study these terms before actually sowing your money in forex market field.

Right Knowledge for Forex Investments

What is mentioned in the last section needs to be elaborated here. Before you start dreaming about nice profits from forex market, it is strictly essential to wear informative glasses about forex trading. For this to happen, you must seek guidance from forex experts, who have been constant spectators of this biggest investment market in the world. Forex training is a popular concept these days, which is tailored to cater your desire for extracting forex information.

In this direction, Internet happens to be a reputed resource to dish up informative content related to forex trading and all other terms discussed so far. There are many web portals, which have understood the need of devising forex trading programs for novice players of this game. Thus, if you are one of them, it is time to get your raw knowledge about forex trading be baked in the right kettle.

The understanding of forex channel and trading range demands expenditure of efforts and time, but once the proficiency is gained; you can see yourself standing in the row of successful investors.

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