Trend lines or trend-lines are the most common part of technical analysis in forex trading. However, when compared to support and resistance, trend lines are used less frequently.
In fact, if used correctly, the trend line is quite accurate.
Unfortunately, most forex traders don't draw them right or try to make a line according to the market, not the other way around.
Drawing trend lines is very easy. There are two types of trend-lines, namely uptrend and downtrend. The up-trend is drawn following a series of rising price movement valleys.
In contrast, a down-trend is a line that follows a series of downward price peaks.
How to draw trend lines
To draw a trend line correctly is to find two major peaks or valleys and connect them.
What's the next step?
Nothing.
sure?
Yes, it's that easy!
This is the trend line in action! Look at the waves!
Trend pattern
There are three trend patterns:
Uptrend (higher lows)
Downtrend (lower highs)
Flat trend (consolidation)
Some important things to remember when using trend lines for trading.
1. There are at least two peaks or valleys to draw a valid trend line but need THREE to confirm an ongoing trend line.
2. The steeper the trend line is, the more likely it is to breakout after the line is broken garis
3. Just like support & resistance lines, the more valleys and peaks that form and touch the trend line, the stronger the trend will be.
Importantly, DO NOT draw trend lines forcefully to match market movements. If it doesn't fit, then the trend line is invalid!