One of my friend ask me whether trend line can act as our entry or not? The Answer is NO! I only use the trend line as my guideline to identified the current trend. How to do this?
Usually i will draw trend line at higher time frame first such as Daily and H4, from that i will know whether market still in the uptrend or downtrend or even sideways. After i know the current trend, then i will zoom to lower TF (time frame) H1, M15,M5 to find a perfect entry.
Sometimes, price will just break or test support/resistance level and then market not change the the direction.
At my previous post i mention that i also use trend line as my emergency exit line.
Showing posts with label buy entry. Show all posts
Showing posts with label buy entry. Show all posts
Wednesday, September 29, 2010
Trend line act as support and resistance level
Trend line can act support and resistance level. Most of trader will use support level for BUY entry and resistance level as a SELL entry.
Support
Support is defined as a price has difficulty to break below, and is so named because it supports or holds up the price. Trend lines show potential support by the extension of the trend line into the future. Support is most often shown by upward trend lines, but can also be shown by sideways trend lines. A strong trend line will keep the price above the trend line and its associated support, until the support weakens, at which time the price will break through the trend line, and trade below the trend line and its associated support.
Resistance
Resistance is defined as a price has difficulty to move upward, and is so named because it resists or holds down the price. Trend lines show potential resistance by the extension of the trend line into the future. Resistance is most often shown by downward trend lines, but can also be shown by sideways trend lines. A strong trend line will keep the price below the trend line and its associated resistance, until the resistance weakens, at which time the price will break through the trend line, and trade above the trend line and its associated resistance.
At example above, when price break the DTL actually market giving a signal they will change the move, in this case market will make u turn and go upward. Its clearly show as long as the market hold the DTL, you can keep your SELL trade but beware if price break above the DTL you should consider to take your profit or cut loss your trade.
Usually i using dtl or utl as my emergency exit line.
Support
Support is defined as a price has difficulty to break below, and is so named because it supports or holds up the price. Trend lines show potential support by the extension of the trend line into the future. Support is most often shown by upward trend lines, but can also be shown by sideways trend lines. A strong trend line will keep the price above the trend line and its associated support, until the support weakens, at which time the price will break through the trend line, and trade below the trend line and its associated support.
Resistance
Resistance is defined as a price has difficulty to move upward, and is so named because it resists or holds down the price. Trend lines show potential resistance by the extension of the trend line into the future. Resistance is most often shown by downward trend lines, but can also be shown by sideways trend lines. A strong trend line will keep the price below the trend line and its associated resistance, until the resistance weakens, at which time the price will break through the trend line, and trade above the trend line and its associated resistance.
At example above, when price break the DTL actually market giving a signal they will change the move, in this case market will make u turn and go upward. Its clearly show as long as the market hold the DTL, you can keep your SELL trade but beware if price break above the DTL you should consider to take your profit or cut loss your trade.
Usually i using dtl or utl as my emergency exit line.
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