I want to share with you another rare forex trendline trading strategy which is off course a price action trading strategy.
As I’ve said here, that I spend more hours watching charts than I spend with my missus and she really gets pissed off sometimes and calls my laptop my “mistress” or “2nd wife” or something along that line 🙂 and as a result of those long hours, I sort of stumbled into this setup by accident a few years ago.
And to be quite honest, it may not be new discovery (and maybe has a special name which I have not seen yet) but just because of that fact that I had never seen or read about it prior, I opened up many forex charts and went back to past price action history to see if this setup was tradeable or not, did it make sense or not.
And guess what?
And I liked what I saw.
I have traded this setup and have made money on this setup and believe me, the risk:reward is really awesome if your trade goes as anticipated.
I say the word “rare” because you will not see a lot of these types of trading setup form on your charts, but when it does happen, it tends to give some really good risk to reward ratio trades.
This trading setup tends to happen when it is impossible to draw a normal trendline trading setup, usually in periods of price rising or falling steeply.
Here’s an example of this trading setup that has already formed in USDCAD which saw price move 700 pips:
Now, look carefully again at that chart above…
Can you see that price is heading back down to this trendline again? ‘
That simply means, that the trendline trading setup is still valid.
It is one of the setups I gave in my forex trading signals and trade setups I publish each week. Bookmark that page and check every Sunday or early Morning before the forex market opens.
Understanding The Structure of This Rare Forex Trendline Trading Strategy And How To Draw Trendlines
Look at the chart above and notice the points 1 & 2 in white color. These are the 2 points I used to draw this trendline.
Now, this is remarkably different from the normal way of how to draw proper trendlines where you connect two lows to draw a rising (upward) trendline and you connect 2 highs to draw a falling (downward) trendline.
With this setup, the first point was a “high” point. The second point was a “low” point. That forms a buy setup trendline.
You wait for price to come down and hit that trendline and look at bullish reversal candlesticks for buy signal confirmation.
What About A Sell Setup Trendline? How Does It Look?
A sell setup trendline would be the exact opposite of the buy setup and will look like this:
- you find a low, and then look for a high on the “other end” of the price and draw your trendline.
- when price comes up to touch that trendline, look for bearish reversal candlesticks to go short.
What Are The Trading Rules?
The trading rules would be exactly the same as those of this forex trendline trading strategy here so click that link and go and check it out if you are not familiar with the forex trendline trading strategy.
That’s it traders, its a very simple setup that has loads of potential.
As I said, this trading setup does not form often but when it does, it is good to take notice because some good price moves can happen and knowing this setup can allow you to effectively “sell at the top” and “buy at the bottom”.
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