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Which is more important? Trend direction or Support/Resistance?
By Sean Hyman | July 31, 2009
Many traders grapple with this all the time. To me it’s clear. The “trend is the trend” because it continues on and blows through supports in a downtrend and resistances in an uptrend.
A current example of this is AUD/USD. Get ready for the AUD/USD to break higher as the “bottom and top pickers” try to short this pair soon (since they are believers that the resistance will hold). The trend traders will get the last laugh, as the top pickers get caught on the wrong side of the market and have to scramble to cover their losing positions which only “fuels the fire” for the trend trader. Click on the charts to enlarge them.
This is why “top and bottom pickers” almost always give up their money to the trend followers. Oh sure, there’s eventually ONE of these that will ultimately be the true “top or bottom” but in between ..there are tons of places that appear to be the top or bottom and are losing trades. So the odds are skewed against them and skewed towards the trend trader.
See a historical example of this here.
Sean Hyman
www.forextradingblog.com
Tags: AUD, blog, charts, dow, downtrend, forex, forextrading, Hyman, lower, market, money, pair, Sean, Sean Hyman, short, time, trade, trader, trades, uptrend, USD
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