What is Forex flat?
Sideways trend (neutral) has another name “flat” (from the English “flat”). A sideways trend reflects the stage of development of the value of securities and other assets, when price fluctuations are very insignificant over a sufficiently long period of time. This is most often due to the uncertainty in general global trends.
Sideways trend is opposed upstream or downward… In technical analysis, a neutral trend is indicated using a sideways channel.
How to recognize and mark a neutral trend?
A sign of a neutral trend or flat on Forex on the price chart is the price highs and lows located sequentially at approximately the same level.
A neutral trend on the price chart of a currency pair, like other types of trends, is indicated by support and resistance lines, which are drawn, respectively, through the lows and highs and are directed horizontally.
How to trade sideways?
Forex flat – this is the time when the strengths of bulls and bears are approximately equal and they are not enough to form an upward or downward trend, so the price does not have a pronounced trend.
As a rule, during a neutral trend, traders, especially those who prefer trending trading style, do not trade because the profit gained from price changes is minimal. However, flat trading is popular with traders who prefer channel trading strategies.
Trading in a sideways trend means:
- purchases from support lines,
- selling at resistance lines.
It should be borne in mind that a breakout of the technical line may mean the beginning of a new price trend, therefore, pending orders can also be used for trading:
- BuyStop – when a flat resistance line is broken,
- SellStop – when the flat support line is broken.
In no case should you neglect stop loss orders, since the price can form a false breakout and then return to the flat.
What indicators can help you identify a flat?
The best flat indicators are Forex oscillators, whose readings range from 0 to 100 and a median line.
Using indicators such as MACD or Stochastic, you can determine the peaks and troughs of the sideways trend, as well as the points where the flat will end.
So, flat is a state of the market when the strengths of bulls and bears are approximately equal, and the price remains in a narrow range for a long time in anticipation of a breakout. It is quite possible to trade in such a market with a profit both within a flat by short trades and on a breakout of the range.
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