5 Quick Hacks to Instantly Identify Price Trends In Forex

Traders – tired of feeling like you’re constantly missing out on those big, juicy trends?

Yeah, me too.

That’s why I’ve put together this handy list of my top 5 ways to determine the current trend direction.

No more guesswork or relying on gut feelings. These strategies will help you get a handle on where the market is headed and help you make more informed trades. The best part?

They’re so simple, even a caveman (or woman) could do it.

Ready to start raking in the profits?

Let’s get started!

A golden technique, but still one that works really well.

To quickly determine the current trend, plonk a sweet old moving average on the chart.

Moving averages, while not the most accurate indicator, provide a quick “at a glance” look at which direction price is trending in. This is especially useful during active hours when markets get fast and messy.

Here’s how to use them:

First, decide which moving average to use.

This isn’t really that important…

With only minor differences, all moving averages display nearly identical data. The EMA has always been a favourite of mine. It provides a sweet balance between the short and long term, which makes finding the trend easy on any timeframe.

I only trade off the 1 hour, so I can’t have my MA’s being too long.

Here’s a few top times to use:

• 15 Min – 15 Day EMA
• 1 Hour – 30 Day EMA
• 4 Hour – 30 Day EMA
• 1 Day – 60 Day EMA

With the MA set up correctly, add it to the chart to see which direction price is currently trending in.

In this example, price is trending lower.

The 30-Day EMA is pointing straight down – a clear sign the trend is heavily bearish. So, we know to stay bearish and look for short opportunities.

Also, take note of the gradient of the average.

The stronger the trend, the more the average will slope down.

Our example shows the average almost vertical, which tells us price is heavily bearish. Fat chance of this trend changing any time soon. Soon price will bottom out and begin to retrace, causing the average to slope higher and telling us the strength has declined.

All in all, the MA quickly reveals the current trend direction.

If we want to track which direction price is trending in, it makes sense to follow the general structure formation of the trend itself.

And how do we do that?

By watching for higher highs and lower lows.

Higher highs/lower lows are the most up-to-date way of determining the current trend, whether long-term or short-term. It signals traders are willing to pay higher/lower prices; and that one side of the market controls the other.

Using higher highs/lower lows to determine the trend isn’t tricky; but can take some practice for beginners.

Let’s go over a few examples…

Above, I’ve denominated all the highs and lows using letters.
It’s clear how closely the trend direction follows new lower lows.

Whenever price made a low lower than the previous low, we saw price continue falling, and the downtrend continue. The lower low signals the bears currently overwhelm the bulls; the bulls either lack interest at these prices or are simply weaker than the bears.

For this to change, a new higher high must form.

A new higher high indicates the bulls are interested in buying at these prices, or enough bulls now exist that they outweigh the bears and want to push price higher.

As a result, we’d see price reverse and move higher.

Another example…

In the image above, we see the opposite situation.

Price is trending higher, so we see consistent higher highs form. The higher highs reveal the bulls either outweigh the bears or the bears are uninterested in selling at these prices. Therefore, the uptrend stays intact, and price continues rising.

If a higher low now forms however, it signals the bears have regained control.

Price will start falling, and we may see a downtrend begin.

Key Point: While a LL during an uptrend or HH in a downtrend can signal a potential trend reversal, it’s critical to wait for further confirmation via a LH or HL forming. These indicate the bulls or bears want the trend to change, making a reversal far more likely.

Here’s quick guide on which highs and lows to watch for:

• Downtrend to uptrend – wait for HH followed by HL.
• Uptrend to downtrend – wait for LL followed by HH.

Heiken Ashi charts are one of the most underrated trend indicators in forex.

Heiken Ashi charts, what the heck are those?

Think candlestick charts, but with much clearer price information.

Rather than show the actual price, Heiken Ashi charts instead show the average price, just like a moving average indicator. This gives the candlesticks a much smoother look and makes trend direction and identification super easy.

Here’s a quick comparison…

Above is a 1-hour candlestick chart of Eur/Usd.

We can see the overall trend is down, but with the messy price action – spikes, small bull moves, etc., – it’s not easy to see.

Let’s use the Heiken Ashi to clear things up…

As we can see, the current trend is far clearer now.

Since the Heiken Ashi shows the average price, many bullish candles that formed spikes and minor pauses/retracements remain bearish. While the actual price did change on these candles, the average price was still down.

Hence, the candles stay bearish.

Pretty neat, huh?

All in all, the Heiken Ashi is a great tool to identify the trend and determine the current direction. It’s also one of the easiest indicators/charts to set up.

Just switch the chart, and the Heiken Ashi is ready to go.

No fiddly setting changes needed!

Want a quick way to identify the current trend?

Look no further than good old Bollinger Bands…

Traders use Bollinger Bands as a confirmation indicator for price action signals. But the bands can also provide critical information about the trend. For example, when the bands expand, that’s usually an early sign a new trending phase is beginning.

In our case, we want to find the current trend direction.

So, we must look at which way the two bands are pointing.

Above, we can see price is rising. The Bollinger Bands have expanded and currently point upwards.

This tells us TWO key points:

1. The trend is currently up.
2. Volatility has increased massively.

We know the trend is up due to the bands pointing upwards. We also know volatility has increased because of how far apart the bands now are.

Just before the uptrend resumed, price was consolidating in a small range.

As a result, volatility was on the low side.

Remember: High volatility = large price moves.

Trends are a series of large price movements interspersed by smaller moves, like retracements and consolidations. These are usually characterized by low volatility (narrow Bollinger Bands), as price doesn’t move much.

As such, an increase in volatility is a sure sign a large trending price move is underway.

Taken together, then…

The bands not only tell us price is trending higher, which is our main concern, but also that a new price move is underway due to the uptick in volatility.

A great help, for us trend chasers.

For any old-timers out there, this should be no surprise.

For decades, traders have used trendlines to identify the current trend direction – and for good reason. Trendlines remain one of the easiest ways to quickly identify the current trend.

To use trendlines, there’s one golden rule to remember:

A Valid Trendline Requires At Least TWO Touches.

At least two higher lows (Uptrend) or two lower highs (downtrend) must connect for a valid trendline to exist.

Any less than that… the line can’t define a trend.

Keep in mind, too: While more touches DO solidify a trend’s existence, they DO NOT make that trend stronger.

Many traders/books will say differently, but it’s just not true at all.

Now, onto some examples…

Here’s a trendline applied to a downtrend on Eur/Usd.

The line quickly tells us price is currently trending lower, while the gradient gives some indication of how fast the trend is moving.

If price now breaks this line, it indicates the trend could be changing.

Key Point: While a trendline break often signals a trend change, it usually suggests a retracement or minor reversal instead. As such, it’s better to use additional techniques – such as higher highs & lower lows – to confirm trend reversals.

Here’s another one…

Above, we can see a Trendline applied to an uptrend on Usd/Jpy.

From a glance, the line tells us price is trending higher. We also know the pace is consistent due to the 90-degree angle – a sure sign of a strong trend.

See how helpful trendlines can be now?

Okay, they have limitations – drawing the lines can get tricky.

But for quickly identifying the current trend, few other tools come close to a simple trendline drawn across highs or lows.

Combine them with other techniques, and they become even more accurate. 

Determining the direction of the current trend can be a challenge, but these tips should make it a whole lot easier.

To really maximize your chances of success, try combining a few different techniques.

For example: Use Heiken Ashi charts alongside HH’s and LL’s.

While higher highs and lower lows indicate the current trend, the Heiken Ashi chart can confirm it by remaining the same colour or changing. The combination of the long-term average trend (Heiken Ashi) and the current trend (HH & LL) increases the validity of our signals.

Test out different combinations, see what works for you!