Simple Forex (Trend Lines) #2 For OANDA:GBPUSD By Anbat

Trend lines- need at least two points touching the line for a possible trend in making, but three points touching for confirmed trend line .

The most general way of describing the behavior of price over time is the “trend.” A trend is simply the primary direction of price movement in the pertinent window of time. However, this general uptrend contains a number of “legs,” smaller-scale price trends that necessarily alternate between up trends and

downtrends – bullish and bearish legs, respectively.

When price remains closely within a diagonal range bounded by two parallel lines, this small price range is often delimited with “trend channels,” indicating

the upper and lower boundaries of the trend. When price moves within a horizontal range without moving in a clear directional trend, the price’s action is said to be in the “trading range.”

There are a few basic rules to bear in mind when drawing trend lines:

1. Tentative trend line – A diagonal line market bounces off of twice. Trend line is indicative of a potential trend, but is not confirmed and actionable just yet.

2. Confirmed trend line – The market has bounced off this trend line three times. Conventional analysis regards this as a sign that the trend line is real, and that the market will react around it.

It is easiest to trade from a trend when its highs or lows hew closely to a recognizable diagonal line, since this line may be used to predict future highs or lows. Opinions vary on whether trend lines should be drawn from the highs and lows of candles or from the body of the candle, the open and close prices; successful traders can be found employing either approach.