How to Use Trendlines in Forex Trading

Trendlines are currently some of the most common techniques of forex analysis. Paradoxically, however, a very significant number of traders resist using them for fear of being wrong. These lines can include a multitude of details and are highly precise, but only if accurately drawn. If they don’t, they will ruin your trading plan.

Trendlines are particularly helpful when it comes to assessing both the trend and the strength of the particular trend. In fact, for these purposes, this price action approach is the most popular. It’s important to note that there are two kinds of lines you can use in forex.

Bearish trendlines

Bearish trendlines are the opposite of the bullish ones. They become helpful as soon as the price declines, with lower tops and lower bottoms. That is why such a line should be above the price action. Typically, it offers price resistance. It is not that difficult to learn how to draw a line. The first element you need to look at is whether or not the trend is bullish or bearish. Adding the trendlines to the chart will instantly expose patterns, regardless of their origin.

It is also worth remembering that you need at least three points on the same line in order to get a pattern. The trend is a whole field, not just a line or another! For an older trend, the area of trend uncertainty is even larger.

Bullish trendlines

Bullish trendlines are easy to understand. If a currency pair is rising, that’s a bullish pattern. This is why the particular pair even has higher bottoms and tops. In the case of this kind of line, you can put it under the price action, joining the bottoms of the pair. This is the easiest way to get support from a trend line.

AlphaFXC is a technology giant focused on the currency market. Generating alpha in the Forex markets is not an easy job but it can be done using the right approach. The high uncertainty in foreign-exchange markets has made them tempting to speculators for many years. Often a major currency pair, such as the dollar/yen, will change several percent a day, a nice occurrence if one has already developed the proper position. Alpha Securities Holding Limited can offer the necessary guidance when it comes to efficient Forex trading.

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