Trend Lines (Part 2)
When drawing trend lines it is
best if you can connect at least two tops or bottoms together. The more tops or
bottoms that connect, the stronger the trend line.
So how can you use trend lines to
your advantage? When the price approaches your trend line, only two things can happen.
The price could either bounce off the trend line and continue the trend OR
price could breakout through the trend line and cause a reversal. We want to
take advantage of that breakout!
Looking at the price is not enough
however. This is where using one or more of the indicators mentioned earlier in
this lesson could help you tremendously.
Notice that as EUR/USD broke the
trend line MACD was showing bearish momentum. Using this information we can
safely say that the breakout will continue to push the euro down and as
traders, we should short this pair
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