Trendline Trading Strategy

Trendline trading system is the most favorite strategy trading among Foreign exchange traders. Traders can use this system on any time frame chart and any trading pair. In this article I will share about how to draw trend lines and how to use them in trading to define trading levels. A trendline is the simple trading tool in technical analysis. This tool also can be traded with other technical tools such as Forex indicator, Elliott wave, trading chart patterns, and etc.

A trendline connects two or more highs or lows. Basically, Forex traders use this line to analyze the market prices around it, in other words market price trade and reverse of the trendline.

Here some tips about how to draw trendline properly.
1. Connect peaks to peaks or connect valley to valley. After you connect highs to highs or lows to lows then we make sure the trendline not broken by price. If there is broken line because of market price between peaks to peaks or between valley to valley then this trendline is invalid.

This trendline is use to define entry point, we just set our trading order several pips below resistance or several pips above support. With this order we look for a reversal movement when the market price bounce from trendline.

2. Follow the trend because trend is your friend
Just remember we only look for sell trading position in down trendline, and we only look for but trading position in up trendline. In trendine trading strategy we trade in the direction of the market trend. When we have a bearish trendline means the market price is in bearish trend and if we have a bullish trendline means the market price is in bullish trend. So we only open a buy trading position when our trendline is sloping up and we only open a sell trading position when our trendline is sloping down. The selling chance show when the candlestick moves up and trades near to the trendline and look for reversal movements.

3. The more levels connected, the stronger trendline will be
If the trendline connects more highs or connects more lows, more stronger trenline will be. Even though trendlines can't last forever, this line will break after several of bounces.