How to Trade During a Downtrend
Whether the trend is up or down, they can happen at any time for any currency pair. Make a short term chart (1 minute) with a rather long timeframe (daily or weekly). If you want to use a short chart with a duration of 1 minute, trading is done by capturing small trends that occur within a minute, an hour, a minute, or even a few seconds.
For example, if you want to use a chart with a duration of 1 week, traders can catch trends that occur within 1 month or 1 year. When the impulse wave declines, it is very possible that a new downtrend will appear again. Therefore, when the correction moves up the downtrend will not go up following where the impulse wave started. Short-sell when a correction wave occurs, assuming that the price will experience a lower impulse wave.
There are several ways to trade when a correction wave occurs. The Fibonacci sequence will help isolate areas where the correction will stop and reverse. Another method is to wait for the correction to stop rising, let the price move sideways and when the price starts to fall immediately do a short trade. Don't forget to apply stop-loss orders for each transaction to manage risk.
Also make sure the trader has prepared an exit strategy in order to make a profit. When there is a downtrend, the assumption is that the price will fall again until it stops. Therefore, the target should be placed near the previous lower line. In the case of a very strong downtrend, the target should be placed at the lower line that just occurred. In a weak downtrend, the target is placed above the emerging lower line.
A downtrend will appear when a large wave (impulse wave) occurs in the downward direction, or decreases. A small wave (correction wave) occurs in an upward, or upward direction. During a downtrend, consider short-selling during a correction. Technical indicators and other strategies will be very helpful to isolate when the correction ends. Always use stop-loss orders to control risk, and plan to exit the trade on profit, such as using a target price.
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