In a sideways trend, the market does not make new highs and no new lows-it runs sideways. Sideways trends are difficult to act on. You can either go to the lower support long or at the upper resistance short or wait for the market to break out of the sideways trend and then position yourself in the new trend direction.
In a Seitwärstrend there are no higher highs or higher lows-the market runs sideways. To trade the sideways market, one can either wait for the eruption in one direction or another or buy at the bottom edge and sell at the top and vice versa.
Trend Confirmation Formations
Above a trend, different chart formations often form. This includes the flag, the rectangle and the rising or falling triangle. In contrast to reversal formations, these are only a kind of breather of the market and indicate that the next course movement will be in the same direction as the trend that dominated before the formation. In addition, the duration of the training usually extends to only a few weeks. The formation is finished when the upper or lower boundary line is broken. The outbreak should be accompanied by a noticeable increase in volume. Within a long-term trend, however, it does not necessarily have to come to the training of one or more continuation formations. Long-term trends can include several continuation formations of a type as well as different versions.
Support and Resistance
As a trader, you often observe that the course does not seem to pass at a certain point. For example, for the gold price, this was the $1000 mark for a long time. In this case, one speaks of resistance. If, on the other hand, the course does not fall under a certain brand, but it always goes up again, then it is called support. If the resistance is broken, then this point often acts as support and vice versa. A first step in the analysis of course histories is the identification of horizontal supports and resistors. Because courses do not develop geradlining in a particular direction, but train a series of high and low points, they can be connected with a line quite easily. Supports are zones on a chart below the current price, where the sale is compensated by the purchase interest and the price rises again. Just below it is rather recommended to put stop courses. In the case of resistance, it is the opposite: starting with a certain course, profit taking and the offer outweighs demand. The fact is that the more often in the past there was a resistance or support to a direction reversal, the more investors are trading in reaching these brands. This also increases the importance of the relevant zone. Those who are on the stock exchange should also be aware of the importance of round course brands. Before a sideways movement, the courses rise or fall to these levels. These are mostly psychological supports or resistors, which do not actually have a chart-technical basis. Just like in real life, the stock market is nothing for eternity. If a support or resistance is sustained by the course, it comes to a role swap-a resistance line then becomes a support and support to the resistance.
Supports are price levels that the course could not break down sustainably. Therefore, supports are suitable for a long-direction entry. The stop is set under the support. Resistors are the opposite of supports. Here, the course does not manage to break beyond that. Resistors are therefore particularly well suited for getting started on the short side. The stop is placed above the resistance.
Trade with the trend
Now we know a lot about trends, support and resistance-but how do we use these insights for our trading? Quite simply: if we set a long-term upward trend for our course and approach a secondary counter-movement of the trend line, we can assume that the primary trend is going up further and going a long position. Since we want to protect ourselves from a high loss, we put a so-called stop-loss order below the trend line. In this case, we are against a loss if we are wrong with our assumption and the support is broken.
In the event of a trend break, the course violates the trend line in a sustainable fashion and is quoted on the closing price basis above or below it. A trend break does not inevitably lead to a turnaround! The trader should pay much more attention to whether higher highs or lower Ti