Trend lines

Trendlines are an important tool to identify trends. They are basicly support or resistance lines with an angles. They are pretty hard to use solely as a trade indicator, so I suggest to use them just as a trend indicator/confirmation.

But with alot of training and experience they could be used with great success. I know traders who use only trendlines and makes several +400 pips trades every month. But remember, they have several years of experience.

Uptrend line

An uptrend line has a positive slope which connects two or more lows of the pair and works as a support. It is an indication of rasing demand and price and hence an uptrend.

See picture below of GBP/JPY daily chart:

See the problem? Often there are several trend lines (blue lines), connecting different lows. But we see they all point up, and therefore we are in an uptrend. When the price breaks through our trend lines, it is an indication that the sellers has begun to short. We see a big drop and the trend direction has switched to down.

We have the same problem here. Several different trend lines (blue lines) connecting different tops. But all the trendlines are pointing down. Once the trend lines are broken, we know there is a possibility there is a trend change in place.

Line angle

The trend line angle should NOT be bigger than 45°. Steeper than that, often is a result of a quick change over a short period of time like news releases and so on. Those trendline will not hold enough! So, try to find trend lines with as low angle as possible.

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