The trend is our friend is a catchy saying but is it really the holy grail of trading the capital markets. The answer to this question surrounds your style of trading and the strategies that you are looking to employ when initiate a trade.
Markets trend approximately 30% of the time and the other 70% they are consolidating in a range. New information is usually the impetus that breaks a security out of a trading range, as investors who are caught on the wrong side are forced to either sell their securities or buy back short positions. Once a security breaks out of a range, it moves in search of a new range and during this period the market trends.
The definition of a trend is the movement in one specific direction over a period of time that continues. Trends obviously move until they stop, and there are many techniques that you may use to identify a trend. Below is a great example using EUR/USD including chart.
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