Sorry, but this is simply isn’t so: technical tools, in themselves, have no “power” over the market’s price movements; your statement is both meaningless and misguiding, at a very basic level - and I’m saying that as a technical analysis trader, myself.
A horizontal trendline break signifies that a former/recent level of the balance between buying pressure and selling pressure has been overcome by the weight of either current buying or selling pressure, and that matters because the imbalances between buying and selling pressure are the sole mover of market prices.
It would help you to read anything really introductory about support and resistance, what they signify in the markets, and what traders should or can do with/about them. (Personally I recommend Joe Ross’s classic beginners’ book, [I]The Law of Charts[/I] - of which you may manage to find a free PDF copy online if you search. I’m sure there also more modern equivalents, but whether they’re as good or as clear, I don’t know.)
Power of technical tools in meaning that price “see” trend lines, levels, and that’s why these tools are impotent. If you are technical trader you must know it. And trading systems based on these technical instruments are rather profitable and good for novice traders. And this forum, I think, for discussion. But not for promotion only one point of view.
JRC, in your chart example you are showing one of the most powerful trade signal there is. After price broke your blue trend line and put in a new low, price then retraced the entire move lower right back to the trend line where former support now becomes resistance and price is rejected setting up a much deeper move lower. This is why I tell people, Don’t Chase the Breakout price has a way of coming back giving you a second chance to enter the trade with a bigger reward. In trading good things happens to those who have patients
I believe that base the analysis only on the trend theory - is unsafe. In order to determine the location of the breakdown of the trend, or the place of beginning, you need to use other tools (patterns, wave analysis …), indicators (Bollinger, moving average, etc.)
if its a basic question of do trend lines help u make money, then yes, its a matter of statistics, anything that can generate more than 50% chances then its good and usable.
I was just referring to what most people (slightly mistakenly, in my opinion) call “supply” and “demand”: call me pedantic, but it’s always seemed to me that “buying pressure” and “selling pressure” are more accurate and less misleading terms. :33:
[QUOTE=“lexys;760404”] I was just referring to what most people (slightly mistakenly, in my opinion) call “supply” and “demand”: call me pedantic, but it’s always seemed to me that “buying pressure” and “selling pressure” are more accurate and less misleading terms. :33:[/QUOTE]
I concur. The market is nothing more than the constant contraction (pressure) and (release) expansion of pressure.
Now turn that into a trade and we’re cooking with bacon.
Most of the times i see the moves in the markets are in the tight ranges and this is why we have to clearly under see the trends in the markets before opening up our orders…
That is true, but I ask the question more out of interest than to change the way I trade. I’m more interested in the logic behind using linear trendlines - rather than alternative ways to do this.
If we are unable to understand the real trends in the currency then trading will not be profitable to us and we have to first devote our time in doing that…
Markets are all about trend, in 2009 had you recognized the trend of people trading in their Blackberry’s for IPhones you would had bought stock in Apple and sold short Research in Motion, that would had made you a killing. Today we see oil prices trending higher, that has the Canadian dollar the strongest currency, and USDCAD in a major down trend. The trend is your friend
Okay so we draw trendlines to help us know if the trend is going to break.
Where do you draw the trendline and how many times you re-draw it is up to you, not every trend is going to be able to draw a good trendline, every trend is unique, just like how many of us in this world is unique that is how trends are.
So in conjunction with trendlines you should probably be looking into reading price action, charts etc. to have a better understanding at WHEN and WHERE to use this indicator.
Trend lines are the most powerful tool for trend and reversals. Just add an ema for more confirmation you’d be surprised how price action acts against the lines and will help you decipher your next trading decision. Keep in mind that lower time frames have a lot of noise and can give you false alarms. In my opinion using the daily and weekly charts give a broader spectrum of price action and more likely where it will hit next. Happy trading