Forex trend line drawing is a critical tool in forex trading analysis. Trend lines allow you to see both support and resistance points on a chart. These are then used to help you determine what type of trading activity to pursue.
Trend line drawing is highly recommended for proper analysis of both short and long term market activity. The support point is the floor in the room. When you begin drawing trend lines, it makes it very easy to spot both support and resistance points. The trend line will enable you to see the overall direction of the position and will then lead you to the support and resistance points. You need at least three points along a trend in order to have a valid trend line.
However, you can also adjust your overall scope from short to moderate to long term trends. As the points adjust up and down, simply re-draw your trend line including the new points. Once you find the new direction, support and resistance points will help you anticipate more significant upturns or downturns in price.
Read more on breakthroughs and breakouts here. Forex trend line drawing simply works in reverse with a downward trend. This will show that the upward price points are still sloping down overall. As we wrap up these tips on forex trend line drawing , we should consider a few cautions. Any trend will only last so long. Continue adjusting your trend line until you actually see the line swing completely from one direction to the other.
A final thing to consider is how steep the trend line is. A more balanced line will tend to be more accurate. A high number of steep trend lines probably points to a problem in your method. Learn about some basic trend indicators. Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.
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