I often see much debate about how to use trend lines
among traders. You hear a lot of people with very strict rules for drawing trend lines
, however price action is powered by human interaction with the market and just as humans are not perfect the market is not perfect either. Despite how and where the trend line
is drawn on the USDCAD
it is unarguable that buyers come into the market every time price actions come around the area marked off by the two trend lines
and the green diagonal horizontal drawn on my chart. As this morning's data caused a decent sell of on this pair and price action approached this trend line
zone buyers swooped into the market to try to respect it. Throughout the day price action will give us confirmation if it wants to respect this trend line
zone and potentially swing up to at least previous structure highs, but potentially even higher forming a new structure high as up-trending markets usually do.
Please note the following rules below for entry:
The trend line
zone holding as support
Continued momentum to the upside
Enter on bullish
momentum breaking out above the 1.32600 level
Profit whatever you can get, but the previous structure high marked off by the red rectangle
could be a good target
Stops at around 1.31700
This trade will lose its potential if first rule becomes no longer applicable. For example if more bearish
momentum enters into the market and we see price action move substantially below the trending zone.
You will find that my style of trading often holds a greater risk than reward, however the potential of price action moving in the favor of my position where profit can be liquidated and banked before price action moves against me is very high when the rules are followed.
If you find yourself liking my style of trading please feel free to follow me as I will post potential trades like this rather frequently.