Trendlines In Forex

 What is a trendline?

Trendlines In Forex unlike the traditional horizontal Support & Resistance (S/R) are diagonal S/R level that price tends to bounce off acting as S/R. They act as support when price is above them and resistance when price is below them. A trendline is simply a diagonal S/R.

Why are trendline form?

Trendlines in Forex are formed because of discount rate on orders placed by the big guys who have enough equity to move the market base on supply and demand.

How to draw your trendlines in forex?

Bullish Market: you need to draw your trendline at the bottom of price

Bearish Market: you need to draw your trendline at the top 

You need to connect your trendline using the outer most peak, and a confirmation of at least two touches to validate the trend line. Another word for peaks is resistance.

Whenever price breaches your trendline and creating a new peak you must adjust your trendline to the new peak this is because always connect your trendline using the outer most boundary.

Buy and Sell Zones using Trendlines in Forex: E.g.

a. Let's say we have a descending trendline as long as price remains under this descending bearish trendline then it remains a bearish market and we are going to continue with the current trend because as long as price remains under the trendline we are in a sellers territory. Now if price was to break this trendline and hold as a retest what do we expect price to do? We expect that price we go up and then we will be in the Buyers Territory. Now as long as we are in the sellers territory we only be taking sell trades and when in the buyers territory we will be looking to take buy trades.... 

Trendlines In Forex (Phaning) 

Trendline Phaning is used to judge trend strength to help us get an idea about weather a trend is strong or weak or continuing or ending. Let's say we have a major trendline and then we have a steeper move that occurs within our overall ascending trendline so what I'm going to do is to use the peak of the overall trendline to connect a steeper trendline. Now when the steeper trendline breaks should we be expecting a bearish market because the general concept is that whenever a trendline breaks it is typically design to show you the change in direction of the market and as well the strength of the market. Now when the steeper trendline breaks what do you feel about your overall trendline because price might likely come to the overall trendline and continue upwards and then we noticed that a new low has been created in the market because of the steeper trendline that breaks so what we have to do is to draw a trendline from the overall trendline again if this breaks and retest then we can be sure that the market has rallied into the sellers territory we can then take a sell trade. That's how to use trendline Phaning to determine the strength of the market bias. This is how you know that your trend has reversed, this is how you know trend reversal. It helps you to gauge the overall market....this trendline Phaning technique is very important when it comes to gauging your trends. 

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