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Determining the direction of the trend - Victor Sperandeo method
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Determining the direction of the trend - Victor Sperandeo method

created Paweł AdamczykJune 19 2019

The concept of trend is without a doubt one of the key aspects of trading. Very often you can meet the iconic saying in the world of investment: "The trend is your friend." This concept means nothing else but the fact that usually investing in line with the trend brings, at least in the longer term, much better results than the game under the so-called electricity.

By interacting with the market, reading various kinds of analysis, trying to understand the price graph, we come across a concept "Trend changes". There are many ways to assess the trend, and when it really is changing. Some methods are based strictly on indicators such as averages, others focus on the sequence of individual wells and peaks. In this article, we will look at one of the concept of changing the trend, which despite the fact that it may seem simple, can be very effective, namely the Victor Sperandeo method.


Be sure to read: Avoiding Erroneous Signals - How do I combine AT indicators?


Determining the trend line

Every investor knows the concept of a trend. However, if anyone had any doubts - the simplest definition says that: the trend is nothing but the dominant direction of the price movement at a given time.

In the case of an upward trend, the price is consistently moving up. Of course, this is not a uniform motion. As a rule, intermittent increases are inheritances, but they do not exceed the last hole. As for the downward trend, the situation is reversed. The price is down and interrupted is the upward movement that does not break the last summit.

The trend line concept is very important in the Victor Sperandero method. This method is based on lines, so take a moment to learn how to set it correctly. How to do it? At the beginning we choose a specific time interval. The next step is drag the trend line from the lowest hole to the point that is the bottom before the highest peak. It is very important to the trend line did not cross the graph between two designated points.

gbpaud

Setting a trend line - an uptrend, GBPAUD. Source: xNUMX XTB.

 

usdchf

Determining the trend line - upward trend, USDCHF. Source: xNUMX XTB.

 

If the price moves in a downward trend, we proceed exactly the same way that we turn the line over. We are starting from the highest peak, then to the highest peak, which precedes the extreme dimple. Similarly the line should not cross the graph.

 

audusd

Determining the trend line - downward trend, AUDUSD. Source: xNUMX XTB.

Establishment of 1-2-3

Once you know how to draw trend lines, we can go to the most important assumption of the Sperandeo method. It is based on three basic conditions.

1. Breaking the trend line: this is the first sign that signals a possible change in the direction of the trend.

gbpaud

Breaking the upward trend line, GBPAUD. Source: xNUMX XTB.

 

audusd

Breakout of the downtrend line, AUDUSD. Source: xNUMX XTB.

 

2. No new peaks in the uptrend, and new holes in the downward trend: if the price moves in an upward trend, after breaking the trend line, the price creates a new peak, but it does not exceed the range of the previous one.

gbpaud

New peak after breaking the upward trend line, GBPAUD. Source: xNUMX XTB.

 

An analogous situation occurs in a downward trend. After breaking the line, the price creates a new hole, which is above the trend line, and does not exceed the level of the lowest hole.

audusd

A new hole after breaking the downward trend line, AUDUSD. Source: xNUMX XTB.

 

3. Breaking the previous hole in an uptrend and the peak in a downward trend.

gbpaud

Change in downward trend, GBPAUD. Source: xNUMX XTB.

 

audusd

Change in the upward trend, AUDUSD. Source: xNUMX XTB.

 

If all three conditions are met, then we can talk about changing the direction of the trend.

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About the Author
Paweł Adamczyk
A graduate of the University of Economics in Katowice. Since her student days, passionate about the currency market, stock exchange, and broadly understood investments. An active trader on the Forex market since the 2013 year. In making everyday investment decisions, in the first place puts the key aspect of the market, the price. A fan of motorization, travel and extreme sports.