Easy Ways to Use Forex Trendline Strategies
Trendline is one of the simplest tools in technical analysis. But don’t be fooled by that simple appearance, because behind its simplicity there is a huge potential to generate profits for your transactions.
“Trendline? Really? “Maybe that question is raging in your mind right now.
Yes. Forex Trendline. Really. Trust me
Have you ever heard the phrase “the trend is your friend” ? Price trends are your friends. Don’t be hostile to the trend because it will only make you tired in trading, and even lead to destruction. You can never beat the market. All you can do is follow the direction in which the market moves. That is the only safest way.
As the name implies, the forex trendline is of course a tool that you can use to identify the direction of the trend. In addition, this forex trendline also functions as a support (in an uptrend) and resistance (in a downtrend).This time, you will learn how to combine forex trendline strategies with technical indicators that are also simple as a system or trading strategy.
The first thing you need to do is of course recognize the trend itself. In plain view, you can actually find out what trend is going on in the market at that time. If you have recognized the current trend, you can draw the forex trendline strategies .
In the example below, GBP / USD chart moves in an uptrend. You can see the forex trendline strategies on the chart.
Okay. Usually then the question arises: what should be done next?
The principle is simple. You just have to wait for the correction to occur to the forex trendline strategies area and look for bullish signal confirmation before the forex trendline breaks.
The problem then is what kind of signal should you look for?
The solutions to these problems are: technical indicators. In this case, you can install technical indicators that are oscillator on your chart. Technical analysts at forex4live.com suggest using stochastic and CCI as a “filter” to look for signals to buy or sell (read here: stochastic and CCI ). As an amplifier, you can also use a candlestick pattern confirmation, or a cool name: candlestick pattern.
Of course you are free to experiment using a variety of indicators that suit your character as a trader, but you should still maintain the principle of ” simplicity” or simplicity. Don’t get it – it’s so complex – it’s just that you are confused by the system that you created yourself. If you want, please visit our education page specifically discussing technical indicators and how to use them here .
Well, after you finish installing the “setup” on your chart, then you just follow the rules described below.
Rules for SCENARIO BUY:
1. Make sure the ongoing trend is UPTREND (upward trend).
2. Wait for correction to the forex trendline area.
3. If a correction has occurred, wait for bullish signal confirmation from stochastic and CCI. If the confirmation of the stochastic and CCI signals is followed by the appearance of the candlestick pattern, the bullish signal will be stronger.
4. Place the target (TP) at the closest resistance, and stop losses (SL) below the trendline (10-20 pips below the trendline).
“Ending” of the scenario above:
Rules for SELL SCENARIO:
- Make sure the ongoing trend is DOWNTREND (down trend).
- Wait for correction to the forex trendline area.
- If a correction has occurred, wait for bearish signal confirmation from stochastic and CCI indicator. If the confirmation of the stochastic and CCI signals is followed by the appearance of the candlestick pattern, the bearish signal will be stronger.
- Place the target (TP) at the closest support, and stop losses (SL) above the forex trendline (10-20 pips above the forex trendline).
Well, the “ending” sell scenario above turns out like this:
The chart examples above happen to use the Daily (daily) and H4 (4 hours) time frames , but of course you don’t need to be stuck on the time frame that is exemplified. Please experiment with trying other time frames that match your style or type of trading.
You are also free to try out with other technical indicators with the same trendline concept.
Finally, remember that there is no perfect trading system. Therefore, use your capital wisely. Apply risk management and good capital management. To be more stable, try first on a demo account .