The adage “the trend is your friend” is perhaps more applicable to currencies than any other market. The fundamental factors driving the currency market tend to change slowly, leading to sustained trends or sideways market conditions that can last for a year or more.
Recognizing this, a logical way to try to trade currencies is to first determine the trend, and then use techniques to trade in concert with that trend — that is, find points when the market is pulling back in an uptrend so you buy at a relatively low level.
The approach outlined here combines the Donchian channel, which determines the trend, with the stochastic oscillator, which is used to time the trade entries.
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