Price Action Trend Line Forex Trading Strategy

The price action trend line forex trading strategy is a strategy that trades based on a trend line breakout setup. The trend lines 0-2 and 0-4 are drawn, with the point 0 being the extreme high or low for a bullish trend and bearish trend respectively.

The strategy adopts the True Range Envelopes and X-Wave-elliot custom indicators in fine tuning the signals.

price-action-forex-trend-line-strategy

Fig. 1.0

Chart Setup

MetaTrader4 Indicators: True Range Envelopes.ex4 (default setting), X-Wave-elliot.ex4 (default setting), Trend Lines

Preferred Time Frame(s): Any

Recommended Trading Sessions: Any

Currency Pairs: Any

Download

Download the Price Action Trend Line Forex Trading Strategy

Trade Example (Click the image for full size)

price-action-forex-trend-line-system

Fig. 1.1

Strategy

Long Entry Rules

Enter a buy in the market if the following indicator or chart pattern are in display:

  1. If price bar opens and closes above the blue 0-4 Trend Line, it is an indication that price is being pushed higher i.e. a bullish trend.
  2. If price bar opens and closes above the middle line of the True Range Envelopes custom indicator, it is a signal that the market is experiencing some bullish sentiment, thereby giving weight to a buy.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions holds true:

  1. If price open and closes below the middle line of the True Range Envelopes custom indicator, an exit or take profit is advised.
  2. Although not drawn, support and resistance levels can be added to the chart and if a major resistance level turn support is breached, it is a trigger to exit or take profit accordingly.

Sell Entry Rules

Place a sell in the market if the following conditions or rules hold sway:

  1. In a bear trend the 0-4 Trend Line is lower than the 0-2 Trend Line and if there’s a bearish breakout of the 0-4 Trend Line, it is an alert that price is heading south i.e. a sell signal.
  2. If price bar opens and closes below the middle line of the True Range Envelopes custom indicator, it is a trigger that price is heading south i.e. a sell signal.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following rules or conditions holds sway:

  1. If price retraces and is able to open and close above the middle line of the True Range Envelopes custom indicator, it denotes a reversal in the current trend.
  2. If support and resistance levels are added to the chart, then we can check for a scenario in which price breaks above a major resistance level, a move that suggest more upward thrust by price.

Free Download

Download the Price Action Trend Line Forex Trading Strategy

About The Trading Indicators

The True Range Envelopes custom indicator is a trend indicator that uses the SMA (14) as its middle band along with two outer upper and lower bands forming a channel.

The X-Wave-elliot is a technical study that draws high/low points on the chart, offering traders a visual picture of troughs and peaks in the market.

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