A very smart computer makes the charts. I’m going to explain how the computer works.
Look at the three pictures.
When the price breaks a trend line, after a time-span, the price will come back to the break point.
The time-span can be short or very long. It often happens. About 95%.
You can check the past. You will find so many samples.
It happens in every time frames. 15M , H1 , H4 , Daily , Weekly. But H4 is the best.
Draw the trend lines from the tip of the bars.
Three examples:
True Trend Line
Look at the two pictures.
The first picture: False
Because the second valley is not below the first valley.
The second picture: True
The second valley is below the first valley.
Draw the trend lines from the tip of the bars.
The trend line should touch the first and second valleys. It’s so important. Some people don’t care about the second valley.
How to trade?
You should trade when the price comes back to the break point. It often happens. About 95%.
You need experience. Check the past to see more examples.
How to find the return points?
You can use Fibonacci for finding the return points.
Draw the Fibonacci from the start point of the trend line and end it at the highest or the lowest bar before the break point.
In these picture, the price has returned after touching the 161.80% or 61.80% of the Fibonacci.
How I trade?
For example, In an uptrend trend line, When the price breaks out the trend line, after 60 pips, I buy. I put 50 pips TP and put the SL, 40 pips in below of the 161.80% of the Fibonacci.
The SL is big but I have to put a big SL. And it profits about 95%.
If the price touched the 161.80% of the Fibonacci, I buy again. I put the TP on the first TP and put the SL, 40 pips in below of the 261.80% of the Fibonacci.
Sometimes 161.80% of the Fibonacci is near to the break point. In these cases, I consider the 261.80% instead of the 161.80%.
Work in the H4 time frame.
