Runaway market trend is a simple, strong and confirmed trend with a clue of the defined pattern, which may be bullish or bearish. This kind of trend usually occurs approximately before five percent price change in either of the direction and reverse to the running trend direction. Generally, runaway gap is formed just before the runaway trend and sometimes, this is also called as perfect trend. With the recognition of such trend on real-time, a trader may avail the profit in the account, therefore, attracting the attention of the forex trader. However, there are ways to catch the runaway market trend.
A runaway gap will characteristically arise for backing the signal of a trend reversal. This might follow a top resistance level or a bottom support level. With due course of time, the price starts to follow any trend, the trend will normally comprise numerous runaway gaps. The runaway gaps are regularly supplemented by big volumes of pairs trading which helps the price sentiment in the way of the trend. This gaps can assist to deliver auxiliary opinion for a specified trading plan which is meant for profit making. Furthermore, we may confirm such trend by following methods as well.
Line chart is indeed the best to know for runaway trend as other charts usually are not able to tell accuracy in trend line but line charts reveal the trending or sideways market in an easy way.
We may use candle chart to analyze the price action pattern which is associated with a runaway trend, and a particular price action pattern assists to confirm such a trend happening in a particular time frame.
This is a true way for finding a strong trend in weekly time frame chart. This technical tool refines the fake or small trends correctly and ultimately provides us the inside information of the market movement.
Exponential Moving Averages
We can use 8 and 21 periods with zero shift in a daily time frame which may give accuracy to map runaway trends, as currency pairs might habitually give corrections to the support and resistance zone before moving in trending market.
Many experts use this technique correspondingly to endorse runaway trend as this is assumed to be a good implementation together with price action methodology. Triangle, wedge, flag, head & shoulder, butterfly, cup & handle are few of the breakout patterns which might be used for the above.
Runaway market trend can be traced out to execute orders on the right moment without any confusion. However, before taking such decisions, we must reconfirm with the help of the above techniques. Numerous opportunities are present in the running market and we only need to stay alert to scan the right opportunity and capitalize on the position.