And where was your entry?
You don't use 50EMA?
The first major error traders posses when creating trend lines is working from past to present, in other words working from left to right on the chart in their construction of the trend line. This is incorrect, for this reason alone; recent price activity is more significant than historical price activity. After all, the forex market is the most dynamic market in the world, meaning it is changing all the time. This approach will seem unorthodox to most trader at first, but in actuality, this is the number one mistake that traders make when creating trend lines. We are accustomed from children to read everything from left to right, correct? When drawing trend lines we must learn to read like the Japanese do, from right to left. Success in creating trend lines requires both an attention to detail and a pattern of consistency. Imprecision and disregard for detail are the common practice in creating trend lines, which will result in the construction of multiple trend lines forcing the trader to hope one of the trend lines will correctly define the trend.
The first step to trend line construction, and most important, is the selection of the two points to create the trend line with. As I stated above, when pursuing to construct a trend line we must read like the Japanese, from right to left. All trend line analysis will be done on the four hour chart compression. By process of elimination of all chart compressions, I have concluded that only the four hour compression is needed. The four hour compression generates less trend line breaks and more accurate price projections than any other time compression. All analysis shown of trend lines will be conducted of the four hour compression.
In order to create a trend line, it is necessary to locate the two points to create the trend line. In this example we will be talking about a demand trend line (uptrend). An uptrend is created when demand exceeds supply; this is where the name demand line is derived from. When choosing the points to create a demand line we are focusing on points of support. True points of support are only those which low has two candles to the left of it and two candles to the right of it which lows do not exceed the low you are using. See the examples below for reference of true support points. To find the second point of the demand line we look for the very next point of support that has two candles to the left and two to the right that do not exceed the low of the support point.
Hi TEB,
Does the arrows on last graph are automatically generated or you put them manually on chart? If automatically, can you share the EA/Indicators?
Thanks,
Great advice from Mouteki to draw trendlines:
Hope it helps.
