Chapter 3  Trade Trend Lines - Overview

Once you have your trend lines drawn and you ensure that you are regularly updating them by deleting invalidated lines, adjusting lines that have been hit, and drawing any good new lines that arise, you simply wait until the price hits one of the trend lines. It is important that you do not “force” any trend lines into the chart: most of the time, your chart will not offer any good-quality, obvious trend lines.

Trend lines, especially in Forex, are usually more useful for identifying probable reversals than breakouts, except where they are against an extremely obvious and strong trend in the opposite direction. In both cases, it is better to wait for price action to confirm the breakout or reversal as required, though the use of Japanese candlestick / price action analysis, than to simply place stop or limit orders before the touch and hoping that it works.

As a rule, steeper trend lines, and trend lines that have been hit very often (particularly where the hits are in an increasing frequency) are more likely to break than hold.

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