How To Determine A Trend?

There are many technical indicators. Everyday a new indicator is being introduced now a days. What you need to do is to master two or three and that’s it. Mastering this trending indicator is must for you!

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First, you need to eyeball the chart to determine if the market is in a trend. You can also use the ADX ( Average Directional Index) Indicator to determine the trend. Unlike the oscillators that have a range between which they oscillate, a trending indicator has no upper or lower bound. The higher the trending indicators reading, the stronger the underlying trend!

ADX, and +DMI, -DMI. +DMI oscillates between 0 and 100. +Mi tells you how the bulls are doing the market and are they successful in pushing the prices higher than last day’s close. -DMI also oscillates between the two numbers 0 and 100. -DMI shows how effective the bears were in the market. Were the bears effective in pushing prices below last days’s low.

You need to master this DMI indicator. Trader use the crossovers between +DMI and -DMI as trading signals. For example, when +DMI crosses above the -DMI, it is a signal that the buyers are now controlling the market. And when -DMI crosses above the +DMI, it tells that now the sellers are controlling the market.

But if both +DMI and -DMI cross each other frequently, it is an indication that neither the bulls are strong nor the bear. Both are wrestling with each other and are unable to overcome the other. In other words, what this means is that the market is ranging or consolidation .