Trend Line: Building and Using in Trade

Trend lines are present in almost everygraphical analysis, it is difficult to imagine how without them traders could determine the direction of the movement of the quotation and identify the moment of completion and the change of the current trend. Some indicators would clearly not be enough for a full-fledged forecast of future fluctuations. Therefore, each novice trader must necessarily include them in their arsenal and be able to apply in their trading system.

As you know, the trend line is of three types:

• Upward ("bullish trend") - the price is rising. When the bull attacks, he tries to poke and raise his opponent with horns up - hence the name goes.
• Downward ("bearish trend") - the price falls. The bear, as is known, seeks to knock down prey down, pile on its weight and "bend it."
• Lateral ("flat") - the price moves in a narrow corridor. Usually this is a sign of the trend's decay and the upcoming strong upward or downward spurt. This is often observed before the release of any very important news.

The trend line is somewhat similar to the levelsresistance and support. However, if the latter serve as a certain boundary, the boundary is arranged horizontally on the graph, then this line indicates the current direction and has a certain slope.

Building

The trend line on the price chart connects twoneighboring peak levels. When the quotation goes down, it connects two neighboring resistance points, and when the currency pair grows, the rising support marks (price peaks) rise consecutively. Sometimes traders have difficulty with the choice of extreme values ​​of the price, which should be used for construction. Subjective vision, or issuing the desired direction for reality - for many traders is a real disaster. In order to avoid errors during the construction of the trend line, it is recommended to apply the Sperandeo rule.

According to this method, the "bearish" line connectstwo adjacent falling highs, preceding the lowest lowest mark of the current price movement. Similarly, the "bullish" trendline is constructed - it passes through successively increasing minima that precede the highest high. As you can see, everything is quite simple and easy to remember.

Forex Strategy on trend lines

It's time to move on to practice. Consider a simple, but at the same time effective strategy, allowing you to trade any quotation and on any timeframes over M5. For example, take a 15-minute chart and a pair of EUR-USD.

In the beginning, it is necessary to construct a trend line ascurrent interval, and at two neighboring, larger intervals (in our case - M30 and H1). If the direction is the same everywhere, go to the next step. Open positions will only be on the trend when the price approaches our straight line.

With an upward movement, we focus on buying,we apply in this case the pending orders of Buy Stop, placed 5 points above the place of contact of the candle with our direct. Thus, in the event of a call, it will work and the position will be opened.

Similarly, we trade in a descending orderMovement, when all three of our lines are pointing down. At the approach of the price to a straight line, we place the Sell Stop order at the level of 5 points below the point of contact of the candle with the trend line.

In this strategy it is convenient to use trailing stop. I recommend that you pay attention to the Advisor Trailingator, who himself will monitor the installation of the stop in automatic mode.