Trend Lines

There is a saying in traders world that the trend is your friend. While this is very much true, I must add to this notion the following: the trend is your friend until the trend line is broken.

The notion of a trend line speaks about its meaning from the beginning: trend line = the line of the trend. So, until the line of a trend is broken, why should we look for the trend to turn? Well, we shouldn’t , and this is one of the most powerful and yet simple things to take into consideration when trading. Everybody knows how to draw a trend line (or at least they thing they know) so respecting the rules and waiting for that line to break is the first thing to take into consideration when trading.

A rising trend will not change until the trend line is broken to the downside, as well as a falling trend will not change direction until the trend line is broken to the upside. Projecting the trend line of a move to the upside for example to the upper part of a trend already gives us a channel, but we should treat this notion on the next sub chapter.

However, one of the most common and tricky things that happen to trend lines are the false/fake breakings that appear quite common, especially on the currency markets. This being a speculation game, if I may use that word, it is worth mentioning that sometimes breaking of a trend line does not necessarily means the trend is going to change. For example, if price is in an upward move and the trend line is broken, the regaining of the previous highs should give us the chance to redraw the initial trendline and to adapt it to the new situation.

The recording that are  coming with this chapter will show you plenty of examples regarding how to treat a trend line and how to use this advantage when trading binary options.

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