Post by Victor VVV on Dec 24, 2021 11:54:42 GMT -5
Better that Moving Average |
100% High Probability TRENDLINE Trading Strategy That Works.
Trade Prime
108K subscribers
In this video I am going to be sharing the best ways of using trendlines
to successfully trade the markets. Just like support and resistance levels,
trendlines are lines that show potential areas of price reversal.
The only difference between the support resistance levels and trendlines, is
that support levels are horizontal lines, while the trendlines are sloped
lines. In an uptrend, we can see that the trendlines are sloped upwards.
Similarly in a downtrend we can see that the trendlines are sloped downwards.
But, the big question here is that how do you draw a trendline. Drawing trendline
is easy, but when you are starting out, it can be overwhelming. Hence, I have
created 3 rules for drawing trendlines.
Rule Number 1. Only look at the major swing points. Look at this chart, here we
can see that the price is in an uptrend. Now, here are the potential trendlines
that could be drawn. But, when we have so many trendlines plotted on the same
chart, It becomes really difficult to trade. We need a more clearer chart.
So, lets start over again. This time, let us first identify the major swing
points on the chart. Here are the major swing points. Now we will plot a
trendline by connecting these swing points. Here is the trendline. It is that
simple. We will only look at the major swing points when we are creating the
trendline. If you have to look for the swing points, then probably you are plotting
them wrong. Most of the time, the best trendlines are pretty clear straight away.
The second rule of drawing trendlines is that you need at least 3 touches to confirm
the trendline.
I have seen many traders, especially on YouTube, say that you need 2 touches to
confirm a trendline. But, think about it logically. You can pick up any 2 points on
the chart and create a trendline.
But when there are 3 points that fall in a straight line, it becomes a confirmed
trendline. Hence I always look for at least 3 touches to confirm a trendline.
The third and the last rule of drawing a trendline is that sometimes, we have to use
2 parallel lines to appropriately draw the trendline. Just like support and resistance,
trendlines also are areas of possible reversals.
This means we cannot expect the market to reverse exactly at the trendline. Sometimes
the market can reverse before hitting the trendline. On the other hand, sometimes the
may go beyond the trendline before reversing. Hence, we need to think of trendlines as
an area rather that a line.