Strong Trend Line Forex Strategy

A lot of traders still don’t understand how to draw a strong high probability trend line.

They can make the difference between great profits and great losses.

Trend lines tend to be more reliable on the bigger time frame’s such as the 4 hour, daily and weekly charts.

Here’s my little guide on how to find and draw the best trend lines in forex.

Drawing strong trend lines in falling markets (downward sloping trend line).

  • Must have at least 3 touching points
  • Touching points should be evenly distributed across the falling trend line
  • Trend line must be at least 55 candlesticks long

Drawing strong trend lines in rising markets (upward sloping trend line).

  • Must have at least 3 touching points
  • Touching points should be evenly distributed across the rising trend line
  • Trend line must be at least 55 candlesticks long

Download

Download the automated WATL Trend Lines Indicator for Metatrader 4.

CAD/JPY Weekly Chart Example

cadjpyweekly-down-trendline

The CAD/JPY chart shows a strong downward sloping trend line with 3 touching points evenly distributed across the falling line.

We bought the close above the violated trend line with stop loss being placed below the lost recent swing low point.

The price rallied by over 1700 pips.

Trading Rules

Buy Conditions:

  • Draw a strong downward sloping trend line
  • Buy a close above the trend line
  • Place a stop-loss below the most recent swing low point

Price objective method: Use risk-to reward ratio at least 1:3 (i.e risking 100 pips, winning 300 pips)
Or use any other exit method.

Buy Conditions:

  • Draw a strong upward sloping trend line
  • Sell a close below the trend line
  • Place a stop-loss above the most recent swing high point

Price objective method: Use risk-to reward ratio at least 1:3 (i.e risking 150 pips, winning 450 pips)
Or use any other exit method.

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