HOW TO DRAW AND TRADE WITH TRENDLINES IN FOREX.
How to draw and trade with trendlines, we’re going to cover the basics, and then we are going to take a look at a few specific strategies regarding the drawing of trendlines.
So when it comes to drawing trend lines, it is usually very straightforward just keep a few points to understand and draw trendlines.
The first essential point is that you need at least three touchpoints to confirm a trendline on any pair chart like USD/JPY.
You can always connect any two random points on a chart that is from left to right.
So how to draw and trade with trendlines, we need to have three touchpoints to confirm a trendline on our currency pair chart.
It looks like this below picture.
We have the origin where we have our first swing point, then obviously on the next swing point.
And we can draw our connection again; you can connect any two random points and only if you get the third bounce.
Then you have a pattern, and then you have a trendline that validates in the markets.
So after the second touchpoint, you can wait for the price to get here, and then there are a few strategies.
That we can apply and that we will learn later on how to capture those trades here again a very lovely trendline.
let’s start with the first which is trend trading with trend lines nowhere is what you want to look.
When trend trading with trend lines, which is an area where support or resistance crosses with a trend line.
So let’s take this one step further. This area is of high confluence because different types of traders are all watching it.
What should be going through your mind as a trader to point something out if we only use a one-time frame?
In this example, which is the daily time frame.
And the reason this is important is that later in this post.
I will begin showing you how to use multi-time frames.
First, you would have established that this is a moving downtrend as the price made lower highs and lower lows, so you would want to trade with the moving downtrend.
Second, you would have identified your trend line through these three points, drawn it in, and had it stretched out further if the price came back up to it.
Third, you would have looked left and spotted the support turned resistance level here and had it drawn in.
Fourth you would have then identified this area of high confluence where your trend line and resistance level intersected, which means there would be possible short trade opportunities once the price got here.
The fifth when the price started to approach this area
since you had this area already identified, you were watching
to see what amount would do once it got here okay a price action.
Continued till Next Post.