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Post of the Day: Validating a Trend Line

By Richard Krivo, Trading Instructor
19 March 2009 05:47 GMT

Power Course Instructor’s Response:

For a support line to be valid, we need two points and then we would trade on third test of that line.

The first point of any line is simply a random point on a chart. When a second point appears, no matter where it appears on the chart, it can be connected to the first by a straight line but that really tells us nothing. When the third point occurs and it can be connected by the same straight line that connects points 1 and 2, now we have something that we can trade from.

See the chart below for a visual...

chart 3 18 09

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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19 March 2009 05:47 GMT