Trendlines Forex trading market..
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Trendlines in forex trading market
Trendline trading is one of the simplest and effective trading strategies but it is not that easy to do. It takes a lot of practice to master. It is highly subjective and very dynamic (always moving). Trendline trading is most effective when used with other indicators such as RSI, or MACD. Trendlines are just support and resistance but instead of drawing horizontal lines, your support and resistance levels are diagonal lines or trends.
To establish a simple trendline, connect the lowest points when the price is trending up. As much as possible, connect the wicks and not just the bodies of a candlestick. A valid trendline happens when it has been respected (bounced) at least 3 times (the more the better). If a bullish trendline has been established and the price is respecting it, it is an indication that the uptrend may continue. Once the trendline is broken, it is an indication that the trend may reverse. You can wait for 3 candles after the trendline is broken and use other indicators to confirm it is not a false breakdown.
Trend Trading
In a downtrend, connect the lower highs of the chart. A valid bearish trendline happens when it has been respected at least 3 times.
Timeframe
Establish the major trendline on higher timeframes (H4, D1, or W1). Trendlines on lower timeframes indicate minor or secondary trends.
Entry Strategy
Once a strong trendline is established, enter a trade one or two candlesticks after the bounce. The trend is your friend. In the below example, you have already established the reliability of the trendline because the price touched and respected it already a few times, you can open a sell position after it hits the trendline.
Another way to trade trendlines is to time the Breakout or Breakdown. A trendline is said to break out when the price breaks a trendline to the upside. A trendline is said to have broken down when it breaks a trendline to the downside. Confirm breakouts and breakdowns by entering a trade a few candles above or below the broken trendline.
Exit Strategy
Close a trade on the next support and resistance levels or use signals from other indicators like RSI and MACD.
Trendlines in forex trading market
Trendline trading is one of the simplest and effective trading strategies but it is not that easy to do. It takes a lot of practice to master. It is highly subjective and very dynamic (always moving). Trendline trading is most effective when used with other indicators such as RSI, or MACD. Trendlines are just support and resistance but instead of drawing horizontal lines, your support and resistance levels are diagonal lines or trends.
To establish a simple trendline, connect the lowest points when the price is trending up. As much as possible, connect the wicks and not just the bodies of a candlestick. A valid trendline happens when it has been respected (bounced) at least 3 times (the more the better). If a bullish trendline has been established and the price is respecting it, it is an indication that the uptrend may continue. Once the trendline is broken, it is an indication that the trend may reverse. You can wait for 3 candles after the trendline is broken and use other indicators to confirm it is not a false breakdown.
Trend Trading
In a downtrend, connect the lower highs of the chart. A valid bearish trendline happens when it has been respected at least 3 times.
Timeframe
Establish the major trendline on higher timeframes (H4, D1, or W1). Trendlines on lower timeframes indicate minor or secondary trends.
Entry Strategy
Once a strong trendline is established, enter a trade one or two candlesticks after the bounce. The trend is your friend. In the below example, you have already established the reliability of the trendline because the price touched and respected it already a few times, you can open a sell position after it hits the trendline.
Another way to trade trendlines is to time the Breakout or Breakdown. A trendline is said to break out when the price breaks a trendline to the upside. A trendline is said to have broken down when it breaks a trendline to the downside. Confirm breakouts and breakdowns by entering a trade a few candles above or below the broken trendline.
Exit Strategy
Close a trade on the next support and resistance levels or use signals from other indicators like RSI and MACD.