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How to use trendlines in forex trading


Well-known member
There are various trading tools that traders can use to carry out market analysis, helping them make trading decisions. One of the simplest trading tools but very useful in helping trading decisions is Trendline. Various strategies can be applied in using trend lines for both trend following and breakout trading strategies.

How to draw this trendline is very easy, just by linking one swing low point to the next swing low or drawing one swing high to the next swing high. In flat-trend market conditions, the trendline forms a horizontal line. When the market is uptrend the trendline forms an ascending line, and when the market is downtrend the trendline forms a descending line.

For the trend-following strategy traders will look for entry points where the price approaches the trendline and is confirmed by a reversal candlestick.

Meanwhile, for breakout trading, traders generally look for entry points when there is a breakout of the trend line, which indicates that the current trend is very strong. Traders can combine trendlines with oscillator indicators such as RSI, or also with chart patterns.

When implementing a trading strategy using a trendline, it is also important for traders to use a trading plan with proper risk management and money management so that losses are minimized. To learn how to trade breakouts with trendlines, you can learn it on the FXOpen blog.
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