Learn To Trade The FX Market: Article

Horizontal vs Trend Lines

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" style="margin-top: 122px;" width="503" /> 
 
Hello Forex Traders, 
What is the difference between horizontal lines and trend lines? That was a question I recently received from a <a href="http://www.winnersedgetrading.com/trading-room-page/" target="_blank">member of our trading room</a>. It’s an excellent question and today’s main article topic in fact. 
ANGLE 
The first but very obvious difference is the angle of the lines. It 
is however important to state the obvious as to reinforce the concept. 
1)      A horizontal line has no angle 
2)      A trend line has an angle which is above 0, but below 90 
3)      A vertical line has a 90 degree angle 
<a href="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-1.jpg"><img alt="15- 11- 2013 tl 1" height="150" src="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-1-300x150.jpg" width="300" /></a> 
The angle of the trend line can vary from anything just above 0 to 
89.99 degrees which is close to a vertical line. But in practical real 
life situations trend lines never have 89.99 degrees of course. Anything
 from 5 to 60 is most common. 
The vertical line has no particular usage in trending, unless used on
 the charts for remembering a particular time or part of price action. 
For the remainder of the article we will therefore focus on the trend 
line and horizontal line. 
VALIDITY 
The validity is another difference between a trend line and a 
horizontal line. A horizontal line could be placed at any support or 
resistance level that a Forex trader assesses as important. A trend 
line, however, must have multiple touches to be considered a valid trend line. 
Here is a summary of trend lines and their number of hits: 
1)      At the minimum a trend lines must have 2 hits / touches, otherwise the trend line has no value. 
2)      A trend line with 3 hits or more is the most valuable as the 3rd hit gives the confirmation of the market respecting the trend line. 
3)      A trend line with 3 hits or more could also be considered the base of a trend channel. 
Horizontal lines also have more importance once price action respects
 that level multiple times but it is not a prerequisite for validity. A 
horizontal line that has one price point is a support or resistance. A 
horizontal line that has multiple points is a potentially a stronger 
support or resistance and could be the top or bottom of a range. 
LINE TRADING 
In theory, both horizontal lines and trend lines can be used <a href="http://www.winnersedgetrading.com/trading-breakouts-real-or-false/" target="_blank">for trading break outs.</a>
 Trading break outs has big advantages – primarily because traders avoid
 lots of moments where price action is indecisive. Price action does 
tend to consolidate the majority of the time and trading break outs 
gives the advantage of entering when the market has a higher change of 
moving in your favor. 
One of the most 
difficult elements of trading is the psychological perspective: let’s 
face it, trading is mental game and implementing one’s trading plan with
 confidence is crucial. Avoiding long drawn out sideways chop certainly 
helps that psychological battle. But it also allows for optimal 
allocation of trading capital. Forex trader who do not have their 
trading capital “stuck” in chop / sideways movement keep their ability 
to enter the market with the break out opportunity of their choice, 
whereas other might have hit their maximum risk levels. 
There is a difference when trading trend lines or horizontal lines. 
The angle is the primary focus point, because there is also a difference
 between trading shallow trend lines, regular trend lines and steep 
trend lines. 
1)      Steep trend lines (more than 40 degrees): price action is 
moving with a lot of momentum, otherwise the trend line could never be 
that steep. A break of this line indicates that this big momentum is 
stopping, but usually it’s only temporarily. Price usually corrects the 
angle of the trend before it continues with the trend. In general, these
 trend lines are great as a trailing stop and are an excellent method of
 taking a profit upon break. 
Some steeper trend line breaks do see a reversal. And trading those 
to the opposite side are profitable. This is primarily happening when a 4
 hour chart is showing a trend and the smaller time frames are moving in
 a steep correction. A break of that steeper counter trend line has a 
higher chance of succeeding. 
<a href="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-3.jpg"><img alt="15- 11- 2013 tl 3" height="148" src="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-3-300x148.jpg" width="300" /></a> 
2)      Regular trend lines (10-40 degrees): price action is moving 
at a well balanced angle but mostly weaker as well. The market is <a href="http://www.winnersedgetrading.com/simple-forex-trading-impulsive-moves/" target="_blank">showing exhaustion</a>
 to one side by price is moving correctively in these cases (as the 
angle suggests). A break of the trend line indicates the end of that 
corrective movement. 
These trend lines, however, still have plenty of space towards the 
next bottom or top (support or resistance) and that is the primary 
reason why the breakout is often less volatile than trend lines with 
shallow angle or horizontal trend lines. All break outs tend to have 
their ups and downs before a 1 directional price action occurs but 
regular trend lines are the most “stable” in their break outs. 
The “stable” break out will lead a good run in one direction before 
the currency bottoms or tops out on the lower time frames. Therefore 
using a tigher stop loss has a higher chance of succeeding here than in 
other examples. At that moment there is a good chance of a hook back or 
pullback to the price level of the broken trend line. But only after a 
good size price moment has been made. Both the break out (strike) and 
pullback (boomerang) are trade setups which the <a href="http://www.winnersedgetrading.com/trading-room-page/" target="_blank">Winners Edge Trading room </a>employs. 
3)      Shallow trend lines (0-10 degrees): price action is moving at
 a weak angle. The market can hardly move away from the top or bottom. 
The correction is very timid. A break of the trend line also indicates 
the end of that corrective movement but there is one crucial difference:
 tops and bottoms (support and resistance) are close by and this could 
make the break out short lived before price action respects those 
levels. 
In our trading room we have a simple solution of making sure that we have <a href="http://www.winnersedgetrading.com/money-management-in-forex-more-than-just-trading/" target="_blank">an appropriate reward to risk </a>when
 tackling these trades. This helps take away the subjectivity from the 
decisions. Remember, always keep your approach to trading as simple as 
can be. 
Due to this lack of space to the next support or resistance, price 
action often moves choppier than usual. Forex traders are not willing to
 take a trade right in front of these levels so many up and downs are 
usually accompanied during this environment. Our <a href="http://www.winnersedgetrading.com/trading-room-page/" target="_blank">trading room also</a> has guidelines on how the break out should proceed. 
4)      Horizontal lines (0 degree): price action has broken the top 
or bottom, which means that 1 support or resistance is out of the way. 
However, there are cases when even though 1 support and resistance has 
been broken, there is another one right above/below it. That could cause
 the unexpected and sudden (opposite) turnaround. 
<a href="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-2.jpg"><img alt="15- 11- 2013 tl 2" height="149" src="http://www.winnersedgetrading.com/wp-content/uploads/2013/11/15-11-2013-tl-2-300x149.jpg" width="300" /></a> 
Often enough the break of horizontal level is accompanied with lots 
of volatility and sudden moves up and down. The break out will see some 
follow through but often enough this potential is limited as price 
action wants to hook back to the broken horizontal level. Very 
frequently the currency actually makes a retracement after this break 
out. This retracement could even turn into a full fledge reversal. With 
horizontal levels it is safer to trade the 2nd break out or continuation trade setup, which in fact occurs when a break out and pullback have already occurred. 
Do you recognize it yourself when trading? What do you think of trend lines and their angle? Let us know down below! 
Have a great weekend and thanks for sharing the article!!</div>

Horizontal vs Trend Lines

Hello Forex Traders, What is the difference between horizontal lines and trend lines? That was a question I recently received from a m...

Horizonal Levels - Forex Trading Strategy

<div dir="ltr" style="text-align: left;" trbidi="on">
Horizontal Levels is one of the simplest 
ideas in Forex trading and yet a very useful Forex trading strategy. 
Horizontal levels are fundamental in most <a href="http://www.fxmarketleaders.com/learnforex/forextradingstrategies">Forex trading strategies</a>
 and aid us in analyzing charts but can also be used on their own as a 
strategy rather than a tool to use for other strategies. Even by just 
watching the most obvious price changes and drawing their horizontal 
levels we can make successful trades and by fully understanding the 
horizontal levels of more complex charts we can spot trends that we 
would have otherwise missed.

 
 
The importance of Horizontal Levels

Most traders consider horizontal 
levels to be just as important as the price action, which is the core to
 Forex trading. Analyzing the combination of the price change and the 
horizontal levels can easily lead us to understanding the trend and 
predicting where the market will go next. Although horizontal levels is a
 very basic Forex trading strategy, many famous and experienced traders 
such as Jesse Livermore, Warren Buffett, and George Soros have confirmed
 that they use it as a basis to many of their strategies.

Horizontal levels help us spot key 
areas on a chart where a change in trend is likely to occur. This can 
help us when deciding where to place a stop, or when we want to enter a 
trade but don’t know the right time to do so. Precise timing can be very
 crucial in many Forex trading strategies and a careful analysis of the 
horizontal levels can help us find the correct timing and place a good 
trade. Keep in mind that horizontal levels may be the foundation of many
 strategies but on its own it is usually not enough and must be used in 
combination with other Forex trading strategies.

Horizontal Levels and ‘Swing Points’

The best way to use horizontal levels 
to our advantage is by analyzing the swing points. Swing points are 
points where the trend changes and by marking horizontal levels at these
 points we can find prices where there is likely to be a change in 
trend. The illustration below shows very clearly how we can use 
horizontal levels to our advantage.

Notice how the swing points have a tendency of repeating themselves. <a href="http://www.fxmarketleaders.com/learnforex/forextradingstrategies/supportandresistancelevels">Support levels can turn in resistance levels</a>
 and vice versa. By marking the horizontal levels on the chart we can 
predict when the next swing point will occur and enter/exit a trade at 
the perfect timing. The blue circles on the chart are the points that we
 should have been able to notice in advanced. These are the most obvious
 entry points and by noticing them we could have given an edge to any 
strategy that we chose to use.

<div style="text-align: center;">
<img alt="horizonal levels strategy" src="http://www.fxmarketleaders.com/portals/0/horizonal%20levels.png" style="height: 200px; line-height: 1.5; margin-top: 3px; text-align: left; width: 420px;" /> 
 
 
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Horizontal Levels and Ranging Markets

Horizontal levels are also very useful
 in range-bound markets. Range-bound markets are markets where the price
 has very clear upper and lower boundaries that the price doesn’t cross.
 By watching the price as it approaches one of the boundaries we can 
predict with great accuracy where the price will trend next. As always, 
the price can be unpredictable and might break the boundary just as we 
decide to enter a trade, but overall this strategy is very reliable and 
safe. The illustration below shows an example of a range-bound market:

Notice how the price jumps back and 
forth between two very obvious boundaries. By marking these boundaries 
as our horizontal levels we can use them to our advantage. Wait for the 
price to approach one of the boundaries to make a move. As we know that 
the price is not likely to cross the horizontal level at the boundary, 
we can enter a trade expecting the trend to switch and the price to go 
back away from the horizontal level. If the price was approaching the 
upper boundary, expect the trend to be bearish and the price to go down 
and if the price was approaching the lower boundary expect a bullish 
trend and an up-going price change. Risk and reward levels are also very
 easy to choose in this kind of market. Risk level should be just above 
or below the boundary that you entered the trade from and reward level 
should be at the opposite boundary of the range-bound market.

Remember! these
 are only three Forex trading strategies which are based on technical 
analysis of the charts. There are dozens of unique strategies out there.
 Some are long term and some are short term. Some involve great risk 
while others are almost risk free. Some are based on a deep 
understanding of current economical events while others are based on a 
technical analysis of the market and trends. The list of diversity goes 
on and on.

* We will occasionally add more of our analyst’s and trader’s favorite strategies so check back if you want to learn more.

</div>

Horizonal Levels - Forex Trading Strategy

Horizontal Levels is one of the simplest ideas in Forex trading and yet a very useful Forex trading strategy. Horizontal levels are funda...

Forex Trading Strategies & Systems Reviews

<div dir="ltr" style="text-align: left;" trbidi="on">
<header class="entry-header">
 <h1 class="entry-title">
Horizontal Line Forex Trading Strategy</h1>
<div class="comments-link">
 <a href="http://www.forextechniques.com/forex-trading-strategies/horizontal-line-forex-trading-strategy.html#respond" title="Comment on Horizontal Line Forex Trading Strategy">Leave a reply</a> </div>
</header>

<div class="entry-content">
 Learning how to use horizontal lines effectively in the forex 
market is an essential aspect of becoming a great technical chart 
trader, this forex trading technique is more commonly known as support 
and resistance trading. There a few different instances in which you can
 make great use of the horizontal line forex trading strategy. We will 
discuss each of these with chart examples in this article: 
 
• Trading bounces from horizontal levels

Strong horizontal support or resistance areas provide high 
probability entry or exit areas for you to keep an eye on when trading 
the forex market. Almost any candlestick reversal bar or other price 
pattern, is significantly strengthened if it occurs at a strong 
horizontal line that has proved to be a significant support or 
resistance area in the past.

In the chart example below we are looking at the daily chart of gold.
 Notice the obvious horizontal level that formed in this market, the 
horizontal line is valid because it was tested two times before the 
signal occurred, indicating it was a significant level. Finally, we can 
see that a well formed candlestick reversal setup, or pin bar, formed 
that showed clear rejection of this horizontal support area. One other 
note on trading bounces of horizontal lines like this; often times these
 horizontal lines will switch from support to resistance or vice versa, 
we can see evidence of this in the chart below as well.

• Horizontal line trading ranges

Another excellent way to implement horizontal lines into your <a href="http://www.forextechniques.com/">forex trading techniques</a>
 is by trading within trading ranges. Markets consolidate often, 
therefore, it is essential that you know how to make use of this 
consolidation by learning to trade off of horizontal support or 
resistance areas that form when a market consolidates.

In the chart example below we are looking at the daily EURJPY, which 
entered into a long trading range earlier this year between about 
138.50/139.00 and 127.00. These areas would have been very high 
probability horizontal line areas to watch for trading signals to form 
at. Since markets consolidate just as much, if not more, than they 
trend, understanding the forex strategy of using horizontal lines to 
trade within trading ranges is very important to your overall forex 
trading arsenal.

• Breakouts of horizontal lines

One other excellent usage of horizontal line support or resistance 
levels is to use them to trade breakouts. The forex market is notorious 
for giving rise to some very powerful breakout moves. Breakouts occur 
following a period of consolidation, all markets eventually breakout of 
consolidation, it is a matter of timing that is the key to determining 
whether or not you trade breakouts successfully.

In order to compensate for the many “false-breakouts” that often occur within the forex market, there is a very good <a href="http://www.forextechniques.com/category/forex-trading-strategies">forex trading strategy</a>
 you can use when trading breakouts. First, wait for the initial 
breakout to occur but do not trade it, instead wait and see what 
happens, if the market genuinely breaks out it will close outside of its
 recent range. Next, wait for a pullback to the breakout level and then 
enter in the direction of the initial breakout, this way you can make 
sure that you are at least trading from a confluent level and have 
avoided the dreaded “false breakout”.

In the chart example below we are looking at the AUDJPY 4hr chart, we
 can see a period of consolidation and then a breakout to the downside 
of this consolidation. Notice that there were actually 2 re-tests of the
 horizontal line support level where the initial breakout occurred, both
 of these re-tests were extremely high-probability entry scenarios.

For more information on forex trading strategies check out this <a href="http://www.forextechniques.com/forex-trading-strategies-introduction-course.html">free forex trading strategies</a> introduction course.

</div>
</div>

Forex Trading Strategies & Systems Reviews

Horizontal Line Forex Trading Strategy Leave a reply Learning how to use horizontal lines effectively in t...

Trading Support and Resistance Key Levels

<div dir="ltr" style="text-align: left;" trbidi="on">
<div class="content">
 Today’s article will focus on trading support and resistance key
 levels as this seems to challenge many developing traders. Learning how
 to trade <a href="http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/the-best-support-and-resistance-levels-part-1/" target="_blank">support and resistance key levels</a> is critical, because in essence, this is where;

a) you will be placing your stops and targets, and

b) this is where the institutional traders are getting in

In reality, support and resistance levels are like ‘doors’ or 
‘walls’, either they will be open or closed – either they will break or 
they will hold shut. Your success will be in determining when they will 
hold, and when they will break.

Thus, it becomes essential to learn how to read key levels so you can
 have a well defended stop, a highly efficient entry, and also have 
proper timing.  In this article, I will cover two powerful tips for 
finding these key support and resistance levels.

#1: Minimum of Two Touches Before you can consider a level to be used as support or resistance, you will want a minimum of two touches.

Why?

Imagine you are in a strong downtrend, and the pair rejects off a particular price heavily – perhaps via a long tailed <a href="http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/pinbar-trading-price-action-forex-trading-with-pinbars/" target="_blank">pin bar</a>.
  You have to consider, with trend traders are just going to see this as
 a test. The bears know there are buyers off the price where the bottom 
of the pin bar formed, but they are not going to give up control of the 
trend just from a simple pin bar.

They are going to retest this level to see if the buyers there are 
strong enough.  If they break it, then the trend and profits will 
continue.  If not, then they will take profit, but it’s unlikely a 
reversal will start immediately.  A good example of this is in the chart
 below.

GBPUSD Daily Chart <a href="http://cdn.2ndskiesforex.com/wp-content/uploads/2013/03/pin-bars-support-and-resistance-key-levels-price-action-2ndskiesforex.jpg"><img alt="pin bars support and resistance key levels price action 2ndskiesforex.com" class="alignnone size-full wp-image-7941" height="516" src="http://cdn.2ndskiesforex.com/wp-content/uploads/2013/03/pin-bars-support-and-resistance-key-levels-price-action-2ndskiesforex.jpg" width="800" /></a>

Looking at the chart above, we can see the pair is in a strong 
downtrend.  In the middle of the chart at A, it forms a counter-trend 
pin bar. Now although the pin bar body is at the prior support area, the
 tail is way below, and its the bottom of the tail where the buyers 
entered in, not at the support area.

Thus, the bulls at the support area were likely stopped out when 
price dipped 100 pips below, & the rejection from the pin bar 
occurred at a place with no two touches. So this would not be a pin bar 
to buy as you can see failed whether or not you used a 50% retrace entry (which can be quite inefficient).

You will also see the same later on with the pin bar at B, which also
 had a low at no known support area or formed a second touch.  This also
 would have been a loser.

Now notice the pin bar at C which is with trend. You will notice the 
pin bar formed a second touch off the level two candles back.  This 
would have been a good <a href="http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/price-action-trading-explained/" target="_blank">price action</a>
 setup to get in because the second rejection would have confirmed the 
level.  And you will notice, it turned out to be a winner.

So the main takeaway from here is look for the two touches, because 
with a one touch, the with trend traders will re-attack that level. And 
it should be noted there is a far more efficient entry than the 50% retrace entry
 which I will discuss in next week’s article, but keep in mind, after 
long tailed pin bars, you don’t have to worry about missing the entry.

Why?

Because if it is going to reverse, the greater probability is that a re-balancing, or ‘re-distribution‘
 of the order flow will begin.  This mostly likely will creating a 
range, or a corrective pullback.  This is also why when you have an <a href="http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/impulsive-and-corrective-price-action/" target="_blank">impulsive price action</a> move, followed by a corrective price action move, it is more often followed by another impulsive price action move.

This is also the reason why an impulsive price action move is rarely 
followed by a counter-trend impulsive price action move. From an order 
flow perspective, this is because if the sellers are heavily in control,
 the buyers will have to overwhelm the sellers, and this requires a lot 
more money and orders then the current bears in control.  This is the 
reason why V-bottoms are more rare than common.

#2: Trading With Trend Increases the Probabilities You might have noticed with the chart above, that trading with trend was more powerful than trading counter-trend. As a whole, <a href="http://2ndskiesforex.com/forex-videos/price-action-forex-trading-trading-counter-trend-price-action-setups/" target="_blank">counter-trend trades</a>
 are a lesser probability trade, so they take more skill, experience, 
and precision. This is simply because you are trading against the 
majority of the order flow, so the odds are already stacked against you.
  For those still having trouble getting consistency, I’d recommend 
trading with trend as much as possible.

Now if you are in a range, then there is no dominant trend, so 
trading reversal type plays are suggested, particularly at the tops and 
bottoms of the range. But when a strong trend is in play like the one 
above, you will find greater profit potential and accuracy trading with 
trend instead of counter trend.

This also holds true for trading support and resistance levels.

Why?

In a strong trend, the larger players are just looking for key levels
 as areas they can get in with trend.  This is traditionally known as a <a href="http://2ndskiesforex.com/forex-videos/forex-price-action-intraday-breakout-pullback-setup/" target="_blank">breakout pullback setup</a>, and generally does not need two touches off the level to confirm its effectiveness.

Why?

Because likely, in a trend, there will be a support or resistance 
level that is already being challenged, which would confirm there are 
buyers or sellers at the level trying to defend it, while the other side
 is attacking it. Once it breaks, the with trend traders often look for a
 pullback towards this level to get back in with trend. A great example 
of this is in the chart below.

AUDJPY With Trend Setups 4hr Chart <a href="http://cdn.2ndskiesforex.com/wp-content/uploads/2013/03/breakout-pullback-setup-trading-with-trend-price-action-chris-capre-2ndskiesforex.jpg"><img alt="breakout pullback setup trading with trend price action chris capre 2ndskiesforex.com" class="alignnone size-full wp-image-7947" height="486" src="http://cdn.2ndskiesforex.com/wp-content/uploads/2013/03/breakout-pullback-setup-trading-with-trend-price-action-chris-capre-2ndskiesforex.jpg" width="800" /></a>

Using the chart above, starting with the bottom left, price climbs 
consistently, gapping up, but then forming a resistance area at A. After
 a brief pullback, we can see price breaks through forming a new SH
 (swing high).  The market then pulls back to the level at A, and at A’,
 forms an aggressive engulfing bar which starts the next up leg for over
 400+ pips before forming a pullback.

The pullback at B which forms the next resistance high, dips just 
below the 20ema and forms a with trend pin bar. This marks the new 
impulsive leg up towards 95.00. Then price pulls back towards the level 
at B, and at B’, double bottoms (two touches) and starts another leg up and a nice with trend entry.

After a marginal break higher, price pulls back and forms another 
with trend pin bar below the 20ema, which starts another up leg towards a
 resistance at C. Sellers enter at C, and after a short pullback, break 
above it, with a brief consolidation at C’, offering a great breakout 
pullback setup to get in with trend.

Keep in mind, in all of these with trend pullbacks, the market pulled
 back towards the levle that it hat the strongest rejection from at A, B
 and C. The strong rejections at those levels are counter-trend players,
 trying to stop the trend. But when the bears tried to get past the last
 major resistance, now turned support (forming a <a href="http://2ndskiesforex.com/forex-videos/price-action-chris-capre-advanced-price-action-trading-strategies/" target="_blank">role reversal level</a>), the bulls used this as an opportunity to get long.

Yet in almost every case where the market formed a resistance, when 
the market attacked that level again, the sellers failed to hold the 
level. This is because they were going against the major order flow, 
which highlights how much easier it is to find key support and 
resistance levels that work when you are trading with trend, and not 
counter trend. So hopefully this highlights the difference.

In Summary 
Finding key levels, and major support or resistance levels is not some 
Da Vinci code type endeavor. Two key things which really help this are 
using the two touch rule, along with trading more with trend than 
counter trend. Of course, there are other <a href="http://2ndskiesforex.com/strategies-for-forex-trading/forex-articles/2-key-clues-to-understanding-support-and-resistance-levels/" target="_blank">key clues to understanding support and resistance</a>,
 but if you can employ these two techniques, they will greatly enhance 
your ability to find key levels, and make highly effective trades around
 them.

</div>
</div>

Trading Support and Resistance Key Levels

Today’s article will focus on trading support and resistance key levels as this seems to challenge many developing traders. Learning...