A secondary trend refers to short term market movements that deviate from the primary trend, temporarily taking a currency pair in the opposite direction. Secondary trends can last for different periods of time, from an hour to a month. After the secondary trend runs its course, the primary trend is re-established.
Secondary trends are difficult to call in real-time because, if a secondary trend lasts long enough and establishes support, it may become the new primary trend. When a currency pair breaks a primary trend and runs on a secondary trend for days at a time, distinguishing primary from secondary becomes more of an art or a matter of opinion. Only on a long-term chart – created after the events – can the primary and secondary trends be clearly identified. Generally speaking, fundamental traders focus on the primary trend and technical traders on the secondary trends.
Read More »
Get ForexDictionary delivered to your inbox!