News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.43% 🇯🇵JPY: 0.40% 🇦🇺AUD: 0.26% 🇨🇭CHF: 0.20% 🇪🇺EUR: 0.04% 🇬🇧GBP: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/n3FcbuVcA2
  • USD/JPY gives back the advance from the start of the week amid the recent weakness in longer-dated US Treasury yields. Get your $USDJPY market update from @DavidJSong here:https://t.co/MATXnuFhaS https://t.co/GEZXU08vy3
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.16% France 40: 0.05% Germany 30: 0.03% US 500: 0.00% Wall Street: -0.34% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/hFqNoqtboO
  • it never ends :s https://t.co/kHS7Smk398
  • RT @JakeSherman: 🚨🚨 Manchin a no on billionaire tax! After Sinema was a no on raising marginal and corporate rates.
  • RT @DeItaone: NRF SAYS EXPECTS RETAILERS WILL HIRE BETWEEN 500,000 AND 665,000 SEASONAL WORKERS
  • BoC's Macklem - There is likely less excess supply in the economy than we thought there would be - Evidence suggests higher prices are not becoming embedded in expectations of ongoing inflation - reasonable tp expect reinvestment phase last until at least we raise rates $CAD
  • The @bankofcanada decided to hold rates constant at 0.25% which is in line with market expectations. Get your market update from @WVenketas here:https://t.co/nl1xnTe4hG https://t.co/IcDPRZOhRh
  • Libya's NOC has major leak in Es Sider Pipeline, requiring 7-10 day shutdown for maintenance - NOC Media Office
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.42% 🇯🇵JPY: 0.38% 🇨🇭CHF: 0.24% 🇦🇺AUD: 0.08% 🇳🇿NZD: -0.01% 🇬🇧GBP: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/y4jjMS9cR8
Learn Forex: How to Trade Trendlines

Learn Forex: How to Trade Trendlines

Walker England, Trading Instructor,

Support and resistance levels are considered one of the most used technical tools in the Forex market. These charting points can be used to find out which direction to trade, time entries, as well as to establish position exits. More often than not these convenient levels are found through drawing lines inside of our graphing software, so today we are going to focus on drawing trendlines on the chart.

When you begin drawing trendlines it is important to remember that not every trader will draw their line the same. Where you draw your lines may not be exactly where I place mine. This is ok as long as we remember the key rule that trendlines must connect at least two common points on our chart. Let’s take a look at a few examples.

Learn Forex: How to Trade Trendlines

Above we can see our first example using a weekly chart of the NAS100 (Nasdaq). The NAS 100 is considered in an uptrend as it has moved 1832 points higher over the course of the last 42 months. Our first trend line is drawn by connecting a series of ascending low points on our graph, which are circled in green. This line is acting as support since price is expected to act as a floor in this scenario, with price holding at these levels.

Once this trendline is drawn, traders will look to take advantage of new higher highs by creating buy orders. The optimal time to take new long positions in an uptrend occurs when price trades down to support and bounces. Once prices has touched support but not closed below it, traders may look to establish new buy entries. When trading an uptrend, traders can also limit risk by establishing stop losses underneath support.

Learn Forex: How to Trade Trendlines

In our next example above we can see an 8Hour chart of the EURAUD declining in a downtrend. Notice how the resistance trendline is formed by connecting the highs on our graph marked in green. On this chart, prices have recently touched the resistance line for the 4th time. It is important to note that the more times a trendline is tested without breaking, the weaker it becomes. Due to this, trend traders normally prefer to trade trendlines on either the third or fourth test.

Since our trendline is pointed down and price is moving lower, we should consider the EURAUD in a strong downtrend. Trend traders can use this information to trade market swings by looking to sell new positions when price moves back up to resistance. Traders should look for prices to touch resistance but not close above it. When price begins moving back in the direction of the trend, we have a valid sell signal. In this scenario stop losses may be placed above support.

Next: Here's How to Validate and Trade a Channel (30 of 47)

Previous: Introduction to Price Action & Trendlines

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to instructor@dailyfx.com.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES