Trendline and Price stopping.
Let's look at the perfect use of trendlines to identify price pullbacks.
In general, the weaker the pullback, the more likely a return to an ongoing trend is.
This means that a weak pullback is worth the risk of our capital. On the other hand, a strong pullback in price is a warning to us that there will most likely be a change of direction.
With the use of two trend lines, you can observe the strength of the momentum on the price retracement phenomenon based on several swings.
Trading Rules - Pullback Theory TL4C
Our first task is to master the correct drawing of lines 0-2 and 0-4.
In an uptrend, the turning point 0 'ZERO' is the extreme highest point.
This is the point where the pullbacks begin - the turning point:
1. Pay attention to the example chart on the main price chart below for the correct marking of turning points and their marking from 0 to 4.
2. Then draw a trend line from point 0 through point 2. This is the 0-2 line (green).
3. Now draw a trend line from point 0 to point 4. This is the 0-4 (red) line.
The essence of our analysis is the relative slope of both lines in relation to each other.
If the 0-4 line is below the 0-2 line, the slowdown in price growth is strong. Avoid trading with this line arrangement.
In the event that the -2 line is below the 0-4 line, the price is ready for further growth. This is the correct setting that we can trade on.
cheers,
Jim
Let's look at the perfect use of trendlines to identify price pullbacks.
In general, the weaker the pullback, the more likely a return to an ongoing trend is.
This means that a weak pullback is worth the risk of our capital. On the other hand, a strong pullback in price is a warning to us that there will most likely be a change of direction.
With the use of two trend lines, you can observe the strength of the momentum on the price retracement phenomenon based on several swings.
Trading Rules - Pullback Theory TL4C
Our first task is to master the correct drawing of lines 0-2 and 0-4.
In an uptrend, the turning point 0 'ZERO' is the extreme highest point.
This is the point where the pullbacks begin - the turning point:
1. Pay attention to the example chart on the main price chart below for the correct marking of turning points and their marking from 0 to 4.
2. Then draw a trend line from point 0 through point 2. This is the 0-2 line (green).
3. Now draw a trend line from point 0 to point 4. This is the 0-4 (red) line.
The essence of our analysis is the relative slope of both lines in relation to each other.
If the 0-4 line is below the 0-2 line, the slowdown in price growth is strong. Avoid trading with this line arrangement.
In the event that the -2 line is below the 0-4 line, the price is ready for further growth. This is the correct setting that we can trade on.
cheers,
Jim