Day Trading A Trendline
Many Day Traders focus on these elaborate day trading systems that in my opinion do not add up to much. There is no problem with a sophisticated day trading system providing you know how to win with this strategy. Day Trading a Trend Line can be an easy way to get aquainted with Forex day trading.
An important part of technical analysis is the concept that price action trends for varying periods, and this idea can be visually displayed via this simple strategy of ‘Day Trading A Trendline’. (simple slanted line drawn between three or more important points on a chart). Rising trends are shown by a trendline drawn between three or more lows identifying price support, falling trends are shown by three or more trendlines drawn between two or more highs identifying price resistance.
The general principle of trendline analysis is that once a trend has been formed, it will continue until the break, thereby we can assume a trading strategy just based on this notion. While this is admittedly a very subjective area, a lot of technical analysis ideas revolve around it one example is using Gann analysis. Day Trading A Trendline presents many possible strategies, and I can write more about this in future articles. The Bottom line is that Day trading systems often use trendlines as a way of showing visual of where support and resistance lies. Below you will see a trendline that I drew on the AUD/JPY chart.
Notice the typical stop run on this last dip on the AUD/JPY, we took this trade for +70 pips on the trendline re-test.