Channels
Now when we know how to draw trend lines, let’s go further and create a good playing field.
To get that field, we have to make parallel lines to our original trend line ( with a perfect angle inherited from proven past performance )
Place them as shown in the first picture ( as many good places you find to place them, better)
Extend them further in the future. (pic2)
We made ourselves a Playing Field – Channels that will give you idea where you should enter the position, where to place your stops, where the market is really moving and what can you expect to follow.
So as you can see looking at pictures from 1 to 3 , if you have drawn chart using my approach on 26th June, you would be able to properly follow the market and profit out of it till today, and if you did make some mistakes, using proper Stop Losses you would prevent your account to be wiped out.
Channels are always there ! It is your job to find them and apply them to the chart.
In the future I will show you some prime examples of channels that were working about 35 years ago, and they are still working perfectly ( lots of my trend lines are actually older than most of you 🙂
We didn’t make these roads – we are just maintaining them 😀
Trend Lines
Most of you already know how to draw the trendline : easy –connect two or more points on the chart ( two lows or two highs ) and you have it.
So what can I show you that you don’t already know ?
Well, the way I do it is with the twist, plus there are some untold rules , that no one so far said it out loud.
Look at the first chart – I know, it is a past performance and easy to pick up the trend and tops & bottoms – only two things I want you to pay attention to :
First is the clear rule – once the Support trendline gets broken, becomes a Resistance trendline
Second – every trendline can be penetrated, but to declare it Broken, at least two consecutive bars have to close Below / Above it
So I have found previous trendline – good for me….but how does it help you in your trading ?
Look now at the second Chart:
That Support trend line was there from June 26th – I had it in place the moment they hit that Low.
How ?? Do I have a crystal ball ?
Nope – That is exactly the same Support trendline from the previous chart – I have cloned it ( copied it ) and placed on that low.
I did that each time they left the low behind.
Once you find an appropriate trend line in past, check it out on different occasions – if it fits, you got your Psychic Trend Line – it is always under the same angle, and can help you greatly to predict future moves , or at least give you way more clear view of future events.
– Always under the same angle
– Great warning system
– Gives you the idea where the market actually moves – or can move
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