Lesson 11: Supply and Demand
Understanding Momentum
Momentum refers to the overall direction of the market. As we have previously studied, the market can be in one of three phases:
Bullish Market – Upward movement.
Bearish Market – Downward movement.
Kangaroo Market – Sideways movement with no clear trend.
Now, let’s analyze how trends move within these three types of momentum.
The Three Types of Market Trends
1. Strong Trend
In a strong trend, either buyers (bullish) or sellers (bearish) are in complete control.
There are very few pullbacks, making it difficult to enter mid-trend.
The best way to trade is to either enter early at the start of the trend or wait for a breakout of the structure.
2. Healthy Trend
A healthy trend provides multiple retracement opportunities, making it more accessible for traders.
The market moves in a structured way, allowing traders to enter at pullbacks.
In the chart below, red marks indicate possible entry points based on pullbacks.
3. Weak Trend
A weak trend lacks clear direction, making it challenging to trade.
The price action appears choppy and erratic, increasing uncertainty.
The best approach is to trade only at key support or resistance levels.
Final Advice
Open TradingView and start practicing identifying different types of trends.
Avoid weak trends and focus on strong and healthy trends for better trade opportunities.
Get ready! The next chapter will cover one of the most crucial lessons in trading, so be prepared to apply all your knowledge.
Start Trading
Start trading now with FintekMarkets and join thousands of traders who have already chosen this successful path.
