Trend line trading

Forex trading

TRENDLINE Break out

Fake out

Contents:

How  Forex market moves

What is trend

What is trend line

Characters of trend line

How to draw trend line

Trend line break

Types of trend line break

What is true break out and what is fake out/False breakout

How to identify breakout from fake out

How to measure breakout strength

How forex market moves?

Forex market moves continuously , it is due to imbalance between supply and demand, When more pressure on demand price increases and when more supply than demand price decrease. The upward movement is uptrend and downward movement is down trend. Market takes a pause before next movement it is termed as consolidation phase.

So market moves uptrend à consolidation-à uptrend -àconsolidation--àUptrend--àReverse trend-à downtrend--à consolidation-à downtrend continue----à reverse trend---à up

 Fig:

market structure

What Is trend?

·         It is the direction to which market moves.

·         It always follows nontrend  to trend to nontrend

·         That is trend….>nontrend/consolidation……..>>>trend……..>>>>nontrend.

·         Smallest time frame largest movement of market.

·         Trend starts from non trend/consolidation

·         Trend ends on nontrend

·         Trend are drawn higher high to higher low,  lower high to lower low not high to low/low to high.

·         Upward and downward sloping can define trend

·         Thre more time price touch trend line more strong trend

Types of Trends

There are three types of trends:

• Uptrend (higher lows)
• Downtrend (lower highs)
• Sideways trends (ranging)

What is trend line;

It is the line drawn by Two swing high or swing low or two tops or two bottoms.

It shows the price direction of the market, that is market is going up or down that is up trend or down trend.

See figure

Types of trend line:

·         Internal trend line/Short  term trend line/interior trend line

·         Exterior/External trendline/Intermediate term trend line

·         Long term trend line

See figure

        

How do you draw trend lines?

To draw trend lines properly, all you have to do is locate two major tops or bottoms and connect them.

Here are trend lines in action! Look at those waves!

trendline