EDUCATION: Trend Support Line
Hello, dear subscribers!
Yesterday we considered the simple support line. Today we continue to examine support types.
Definition
Trend support line occurs where the price is in the uptrend and is formed by the lows on the candlestick chart. Next to this line the price is likely to bounce off it because the demand/supply imbalance.
How to trade with trend support?
When we can draw line which connects 3 lows (1,2 and 3 points), the next lows which are lying on this line can be the properly entry points. Also we need to take a stop loss to eliminate the significant price decline effects. According to the chart this strategy would bring profit at points (4), (5), (6), (7) and (8). The first loss would be at the breakpoint (B), but the stoploss level reduce it.
Summary
1)To define the support line by three points
2)To enter the position next to the line
3)To fix profit in case of success
4)To fix a small loss with the stoploss setup in case of support breakout
Yesterday we considered the simple support line. Today we continue to examine support types.
Definition
Trend support line occurs where the price is in the uptrend and is formed by the lows on the candlestick chart. Next to this line the price is likely to bounce off it because the demand/supply imbalance.
How to trade with trend support?
When we can draw line which connects 3 lows (1,2 and 3 points), the next lows which are lying on this line can be the properly entry points. Also we need to take a stop loss to eliminate the significant price decline effects. According to the chart this strategy would bring profit at points (4), (5), (6), (7) and (8). The first loss would be at the breakpoint (B), but the stoploss level reduce it.
Summary
1)To define the support line by three points
2)To enter the position next to the line
3)To fix profit in case of success
4)To fix a small loss with the stoploss setup in case of support breakout
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