Skill of Determining Price Direction Follow to Benefit
To determine price directions, you can use technical analysis that relies on studying charts and historical prices. There are three main types of price trends¹:
- *Uptrend*: Characterized by rising highs and rising lows, where the price reaches higher levels than before.
- *Downtrend*: Characterized by falling highs and falling lows, where the price reaches lower levels than before.
- *Sideways trend*: Characterized by neutral highs and lows, where the price moves within a narrow horizontal range.
You can use technical analysis tools such as²:
- *Moving averages*: Help in determining the general direction of the market.
- *Momentum indicators*: Such as the MACD indicator, which helps in determining the strength of the trend.
- *Support and resistance levels*: Help in identifying potential turning points in the trend.
- *Chart patterns*: Such as peaks and troughs, which help in identifying trends and reversals.
You can also use platforms like Finnhub to obtain market data and charts.³
