In order for you to use the trendline trading system, you need to know how to draw a valid or proper trendline. You need a minimum of two lower swing high peaks to draw a downward trendline to show market in a downtrend and two higher swing lows to draw an upward trendine to show market in an uptrend like the chart show below. For more information on how to draw a trendline, check this out: No forex indicators are required but you should know your reversal candlesticks patterns , as they are very helpful in giving you signals to buy or sell when price touches the trendlines.
All forex trading strategies have weaknesses and the trendline trading strategy is no exception:. A better way to trade the trendline trading strategy is to use reversal candlesticks as your trade entry confirmation.
Well, when you see price heading up to a falling downward trendline, look for bearish reversal candlesticks like these as price touches the trendlines to sell:. If price falls down and touches an upward trendline, look for bullish reversal candlesticks for buy entry confirmation:.
The use of reversal candlesticks like above really enhances your trade entry and makes sure you are on the right side of the market when making a trade because of the price action signals given by the reversal candlesticks. Free Forex Trading Signals. Any one of those 2 lines is a valid trendline. If price breaks them, consider it as trend change and use trendline breakout strategy to sell.
If one breaks, next thing the price has to content with is the second trendline. Based on just price action technical analysis, here are 3 possible situations that can happen. Watch out for possible bull trap if price breaks the major resistance level and goes up…It may be a trick. The reason I say this is because if you look at the chart closely, the UP move is pretty much extended already and with the major resistance coming into play, I would not be thinking of buying.
Also watch for bearish reversal candlestick forming on the resistance zone etc to go short. Risk reward for such setups are really excellent if trade works out as anticipated and stop loss should be pretty tight.
Thanks Rkae y How vividly you settle down all this. Now the art is to identify where we are treading among st these 3 scenarios you carved out. Rkay can I consult you on my market. If yes where I should I wrtie to you on this public network or you can give me some other contact.
What I like is your minimalist approach devoid of many indicators. When things get simple I think we are moving in right direction because we often wisdom is lost in noises and solutions are always simple. Ask your questions or attach charts here so that everyone that reads can benefit. That would be a good thing I believe. I have attached a chart of nifty Here the trend which was started from feb lows is only confirmed as late as last week when three points fall on the same line.
So how to trade from Feb To september. I have drawn a trend 1 which the chart is respecting for a long time and then suddenly it goes away from it. So how to identify which trend to follow. In hindsight it is visible but in real time it is perplexing.
In terms of trends, follow the trendline: Hi RKay Many a times a trend line is broken and then it goes into consolidation phase. And then again resumes its previous path but due to time decay trend line goes very far from the real picture. So in consolidation does this becomes redundant and how to identify the consolidation from a break. Hello Vijay, whatever the market does to trendlines is out of our control. You just trade the trendline bounce or the trenline break. Yes you will see consolidation after trendline breaks and the way i trade them is to make sure consolidation happens in a level of importance ,like a broken trendline retest and then confirm with reversal candlesticks to buy or sell.
So nice of you to reply. Is it necessary that the trend line will depict the situation on all time frames though you mentioned it but I want to confirm. RKay if time permits please see this link. I have tried to draw the trend line on Week scale from the low of FEB lows to this time.
What I have found that we are at a very critical stage of breaking or bouncing from it. If it breaks it and stays there for a day or two sould I confirm it by seeing the crossover of 9 ema and 18 ema. Please tell me is the right trend line I have drawn. I know you ar. You will notice on your charts that price does two things when it comes to a trendline: This strategy is about how trade when prices bounce off the trendline. Prev Article Next Article. I have attached in your mail rkay forex………..
Guess what this action does to price when profit taking happens? Hi Vijay, Ask your questions or attach charts here so that everyone that reads can benefit. How to attach charts to comments: RKay if time permits please see this link http: Tq rkay luv to read ur blog. Hi Nizam, thanks for visiting and making a comment. Great info, I love the way you broke it down.
Better than some p;aid material. ET, its always better to simplyfy things in trading. Thanks for visiting forextradingstrategies4u.More...