Peace,
My name is Kevin and I’m new to FX trading. I see a common strategy being used is Price Action. I understand the strategy for the most part, but i just have one question. When attempting to establish trend lines how far back do you go?
Thanks for the insight in advance
As far back as you can, the more points you can match up, or connect, the stronger your area of support/resistance.
However, when you say trend lines I automatically think diagonal lines. Are you referring to diagonal or horizontal lines?
i’m not the most expert user of s/r lines but I take them from the daily chart and I look back 12 months. I guess that means the last 250 or so bars / candles.
When drawing trend lines you want to be sure you don’t have something unique to only your chart. Best practice for drawing trend lines is go back as far as possible in history and connect the highest high with next high for resistance and lowest low to next low for support. If you are trading intraday timeframe begin with daily chart then finish with your intraday timeframe. Here is a sample I posted on a previous thread just the other day.
When you say trend lines, are you charting up or down trends, if so you probably don’t have to go back very far, your looking for the the trend touching or breaking out of the line, the general rule is where the line touches or breaks then 3 times is good indicator of the movement.
However some have a train of thought that on the 3rd movement then the trend could be running out of steam and it’s too late to enter the trade.
