How do you calculate a price target in a trending market in forex trading?
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Answer:
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There is no set answer for this because it all depends on a trader.
A target can be a mental target, a risk aversion target, a profit target etc...but I think I know what you mean.
There are several ways:
1. Pivot points (pivot zones)
2. Fibonacci studies
3. Support/resistance lines
For example, if using pivot points, you have S1, S2, S3, P, R1, R2, R3.
S is support
P is pivot point
R is resistance
If you calculated these before 5 PM EST (End of trading day for most FX brokers) and then at 5:00:01 the market opened ABOVE your pivot point -- that is an indication that the market will be bullish. Now your first price target is R1, then R2, then R3.
One strategy, other then closing your position, is to reduce your position size at each of those levels.
Hope that helped!
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