Technical Analysis - Material - Lecture 7 - November 11, 2018.pdf

Line however a third test of this line is necessary

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line, however, a third test of this line is necessary for confirming this  line as a trend‐line. 2. Downtrend line:  This line is drawn above the corrective highs of  a downtrend. This line obviously slopes downwards as the trend is  falling. A third test of this line is necessary for confirming this line as a  trend‐line. 3. Horizontal trend line.
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Uptrend line
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Downtrend line
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Horizontal trend line
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The importance of trading with the trend By trading with the trend chances are higher for your trade to  become a successful one.  Contra‐trend trades have less chance to be profitable.
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Example GBPUSD
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How to make use of trend lines?  (Buy/Sell Techniques) Rule No. 1:  In an uptrend, buy when the price touches its trend‐line and  begins to rebound. It takes two points to draw a trend‐line; a third touch of  this line is a confirmation that this trend‐line is valid. Rule No. 2:  Sell when a violation of a confirmed up trend‐line occurs.  Obviously, an upward break of a confirmed down trend‐line is a buy signal. Rule No. 3:  The reversal role.
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Case Study
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  • Spring '15
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