The Easy Way To Use A Trendline Strategy. Trendline is one of the simplest tool in technical analysis. But don't be fooled by its simple appearance, because behind its simplicity stored a great potential to generate profits for your transaction.
"Trendline? Seriously? " Perhaps that question which raged in your mind at the moment.
Yes. The Trendline. Seriously. Trust Me.
Ever heard the phrase "the trend is your friend"? The price trend is your friend. Don't be hostile to the trend because it will only make you confusion in trading, even leads to destruction. You will never be able to beat the market. You can do is follow what direction the market is moving. That's the only safest way.
True to its name, trendline, of course, is a tool that you can use to identify the direction of the trend. In addition, it also serves as a trendline support (in the uptrend) and resistance (in downtrend). This time, you will learn how to combine a trendline with technical indicators are also modest as a system or trading strategy.
The first time you need to do is of course recognize the trend itself. Are visible, in fact you can already know what trend underway in the market at the time (read: about trendline). If you have recognized the trend that took place at that time, you can draw a trendline.
In the example below, the visible chart of GBP/USD is moving in an uptrend. You can see the chart in the trendline.
Okay. Usually then comes the question: what should be done next?
The principle is simple only. You just wait for the correction occurring until the trendline to an area and find the confirmation signal before the bullish trendline translucent.
The issue then is what kind of signal you should look for?
The solution to these problems is: technical indicators. In this case, you could put the technical indicators in the chart Your oscillator. Technical analyst in FOREXimf.com suggest to use stochastic and CCI as a "filter" to search for a signal buy or sell (stochastic and CCI). As an amplifier, you can also use the confirmation of candlestick patterns, or the name cool: candlestick pattern.
Of course you are free to experiment using a variety of indicators that correspond to your character as a trader, but you should keep the principle of "simplicity" or simplicity. Don't get – it was so complex – thus You are puzzled by the system that you create yourself.
Well, after you have finished installing "setup" in your chart, then you can just follow the rules described below.
Rules for the BUY SCENARIO:
1. Make sure the ongoing trend is UPTREND (trend rising).
2. Wait for the correction occurs to the trendline.
3. If a correction already happening, wait for confirmation from stochastic bullish signals and CCI. If the confirmation signal stochastic and CCI is followed by the appearance of candlestick pattern, then the bullish signals will be more powerful.
4. place the target (TP) in the nearest resistance, as well as the stoploss (SL) below the trendline (10-20 pips below the trendline).
"Ending" from the above scenario:
Rules to SELL SCENARIOS:
1. Make sure the ongoing trend is DOWNTREND (down trend).
2. Wait for the correction occurs to the trendline.
3. If a correction already happening, wait for confirmation from stochastic bearish signal and CCI. If the confirmation signal stochastic and CCI is followed by the appearance of candlestick pattern, then the bearish signal will be stronger.
4. place the target (TP) in the nearest support, as well as the stoploss (SL) above the trendline (10-20 pips above the trendline).
Well, the "ending" scenarios sell above it turns out like this:
Examples happen to use the above chart time frame Daily (daily) and H4 (4 hours), but of course you don't need to be glued to the time frame that is exemplified. Please bereksperiman try another time frame that suits your trading style or type.
You are also free to do a test run with the other technical indicators with the same trendline.
Source: foreximf.com
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