Talking Points:
• In technical analysis, trendlines are amongst the most commonly used tools
• Using the patterns properly is key to its success in identifying good trade setups
• We discuss a few important elements of trendlines looking at EURUSD, EURGBP, GBPJPY and SPX
Want to develop a more in-depth knowledge on the market and strategies? Check out the DailyFX Trading Guides we have produced on a range of topics.
Trendlines are one of the most basic tools in technical analysis and they can be used to identify or confirm strong trade setups. However, like many other trading techniques, these simple patterns can be miss-used to the detriment of our account. Perhaps most important in using trendlines is the larger and more prominent it is, the greater influence it carries. Also, trendlines should not be considered to reflect laser precious nor should we simply write it off it is breached (internal trendlines and former-support-turned-new-resistance are common). We discuss a few of the particulars for one of trading's most ubiquitous tools using EURUSD, EURGBP, GBJPY and S&P 500 charts in today's Strategy Video.
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