Online Trading Academy has its roots in the largest trading floor in the Western US, founded in by Eyal Shahar. Independent traders needed training to be successful in their investments, and soon a teaching model was born.

Enriching lives worldwide through exceptional financial education. As stated in a previous article, moving averages can help traders potentially determine a trend and also possibly get them better prices when they trade. Moving averages can be very helpful, but are also one of the tools that are most commonly misused by novice traders. A line that is drawn over pivot highs or under pivot lows to show the prevailing direction of price. Trendlines are a visual representation of support and resistance in any time frame.

Before we jump into some charts, I want to add that we at Online Trading Academy use quality supply zones to sell and quality demand zones to buy-NOT support and resistance. Now, there are two basic schools of thought on how to draw in trendlines. The first is to use the ABSOLUTE high and low pivots to draw in your lines. The second, and the one that I personally use, is to look for the lines that have the most touches WITHOUT drawing through candlestick bodies.

In this NZDUSD chart, the trader using the absolute pivot highs to draw in the downward sloping line only had two touches of the line before price action broke through it.

The trader drawing for the most touches while not drawing through candle bodies would have had four touches, giving us a valid line.

One of the main reasons I prefer to use the number of touches technique is because with the spot forex market, not everyone sees the exact same pivot highs and low. This is because spot forex is not a centralized market where all trades are reported to one exchange and everyone sees the exact same prices. When looking at these pivot highs and lows, one broker might be a handful of pips off from another broker. The farther forward in time you go, the farther and farther apart their respective trendlines will become.

In the futures market, which has a centralized exchange, I use the same technique which so far has worked fine for me. In the following rather convoluted chart, I drew in an upward sloping black trendline with 4 touches and 3 demand zones that could have been used for a long entry. As we like to say, we get paid on the quality of our trades, not the quantity. That was one extra tidbit to indicate that the line was drawn correctly.

How to Use Trend Lines in Forex - ijiyyyiqic.web.fc2.com

Put your favorite moving averages on the same USDJPY 60 minute chart and scroll back to the same time. Where would your technique have gotten you in? Very often the moving average techniques I see from new traders gets them in much later than this trendline tool. There are many different ways to use trendlines, these include drawing in channels, triangles, etc. All can be helpful when used in conjunction with our core strategy of buying in demand and selling in supply. These other techniques will be covered in a future newsletter.

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Home Resources Lessons from the Pros Trendlines and the F Forex September 15, Trendlines and the Forex Market Rick Wright Instructor. Disclaimer This newsletter is written for educational purposes only.

By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader.

The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.

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