how to identify long term trend for investors

Long term trend or secular trend is most important thing for investors. That’s why “A trend is your friend,” is one of the best staying for the investor community. The smart investor always wants to get in at the bottom and want to encash profit at the top. This practically impossible but with the help of proper technical analysis, investors can enter just around bottom and exit just after the top.
Mass psychology of the markets actually moves the markets and create primary, intermediate and short term trends.
Learning how to identify the primary long term trend should be the first order of business for any investor.
Most investors, once invested in an uptrend, will stay there looking for any weakness in the ride up, which is the indicator needed to jump off and take the profit. The bull and bear markets are a form of primary secular trends. A bull market can last for 1 to 3 years while bear market last for ½ or 2/3 time period of a bull market. Sometimes favorable or uneasy condition can stretch their time frame.
Within all primary trends are intermediate trends, sudden rallies and directional turnarounds make up the intermediate trends and, for the most part, are the results of some kind of economic or political action and its subsequent reaction. This type of trends is important for swing or positional traders and investors. Observation also shows us that each bull and bear market will have at least three intermediate cycles. Each intermediate cycle could last as little as two weeks or as long as six to eight weeks.
To determine the long-term trends that appear on my charts I use TCRR method on monthly chart (combination of trend channel + SROC and RSI). SROC means smoothed rate of change (ROC).
In above, euro-dollar chart, trend channel drawn from 1 dec 2009 to 1 dec 2015 with 1.5% deviation. The direction of trend channel clearly suggests primary trend which is bearish.
April 2011 and April 2014 top easily cached by trend channel.
SROC caught almost every top and bottom just after its formation and RSI confirmed it.
This the best method for entering near bottom and exit at top strategy. The entry should be on the basis of the trend channel. Means bottom touching lower channel line then enter and top touching middle or upper channel line then exit. Now in dec 2015, euro touching Lower channel line with bottom out signal on RSI and SROC will be buying opportunity for investors. To minimize risk, investors must follow staggered type buying strategy.
As we entering on monthly chart basis, expected results will take months to years to appear. Most amateur investors forget this and get lured to small profits.
Same chart but time frame extended from 2009 to 2002. So almost 13-14 years monthly chart for euro/dollar pair. Applied 2% deviation trend channel from start to end, showing secular uptrend of the euro with small to extreme intermittent correction against the dollar. Currently heading for fresh bottom formation. Here you can see that trend channel caught the perfect top of 2008.

The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
COPYRIGHT © 2009-2018. Pramod Baviskar. Dalal street winners advisory and coaching services. FAQ | Disclaimer | Privacy Policy

This website is best viewed using Microsoft Internet Explorer 9 or higher, and/or latest version of Google Chrome and Mozila Firefox browsers.