Line of trend: construction and use in trade

Trend lines are present in almost every graphical analysis, it's hard to imagine how without them traders could determine the direction of the movement of the quotation and reveal the moment of completion and change of the current trend. One of the indicators would clearly not be enough for a full-fledged forecast of future fluctuations. Therefore, each novice trader must necessarily include them in their arsenal and be able to apply in their trading system.

As you know, the trend line is of three types:

• Upward ("bullish trend") - the price is rising. When the bull attacks, it tries to pierce and raise its opponent with horns upwards - hence the name.
• Downward ("bearish trend") - the price falls. The bear, as is known, seeks to knock down the prey down, pile on its weight and "bend it."
• Lateral ("flat") - the price moves in a narrow corridor. Usually this is a sign of the trend's decay and the upcoming strong upward or downward spurt. This is often observed before the release of any very important news.

The trend line is somewhat similar to the resistance and support levels. However, if the latter serve as a certain boundary, the boundary is arranged horizontally on the graph, then this line indicates the current direction and has a certain slope.

Building

The trend line on the price chart connects two neighboring peak levels. When the quotation goes down, it connects two neighboring resistance points, and when the currency pair grows, the support marks (the maximums of prices) increase consecutively. Sometimes traders face the difficulty of choosing the extreme values of the price to be used for construction. Subjective vision, or issuing the desired direction for the reality - for many traders is a real disaster. To avoid errors in the construction of the trend line, it is recommended to apply the Sperandeo rule.

According to this method, the "bearish" line connects two adjacent falling highs, preceding the lowest lowest mark of the current price movement. Similarly, the "bull" trend line is constructed - it passes through successively increasing minima that precede the highest high. As you can see, everything is quite simple and easy to remember.

Forex Strategy on trend lines

It's time to move on to practice. Consider a simple, but at the same time effective strategy that allows you to trade any quotation and on any timeframes older than M5. For example, take a 15-minute chart and a pair of EUR-USD.
First, we should build a trend line both on the current interval, and on two neighboring, larger intervals (in our case - M30 and H1). If the direction is the same everywhere, go to the next step. Open positions will only be on the trend when the price approaches our straight line.

With an upward movement, we focus on buying, in this case we apply Buy Stop pending orders , placed 5 points higher than the place of contact of the candle with our straight line. Thus, in the event of a call, it will work and the position will be opened.

Similarly, we trade in a descending movement, when all three of our lines are pointing down. At the approach of the price to a straight line, we place the Sell Stop order at the level of 5 points below the point of contact of the candle with the trend line.

In this strategy it is convenient to use trailing stop. I recommend that you pay attention to the Advisor Trailingator, who himself will monitor the installation of the stop in automatic mode.