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.
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
Trade Example (Click the image for full size)
Long Entry Rules
Enter a buy in the market if the following indicator or chart pattern are in display:
- 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.
- 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:
- If price open and closes below the middle line of the True Range Envelopes custom indicator, an exit or take profit is advised.
- 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:
- 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.
- 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:
- 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.
- 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.
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.