When it's about trade or business, people have always come up with ways or methods to predict what would likely happen in the future or what the trend of the market they're dealing now. What would they do that, anyway? The reasons are never far away from getting profit or lots of benefits. The more they could predict the market trend, the more profit they can gain. The same thing also happens in Forex trading market. People have found methods, ways, or systems that allow them to see predict which currencies are favorite and which aren't. They could view the possibility of getting profit from the likeable ones and getting away from the ones people avoid. Another way to do so is by having Forex trendlines system.
What are Forex trendlines? Trendlines are the lines that are drawn on the price chart. They're used to connect rising points to show uptrend or to connect down points to show downtrend. In order to draw it, the points should at least consist of two price points. When it is long and there're more points to connect, it means the trend is strong enough to support the prices or to resist other prices because the market participants take interest on it. If that happens, it won't easily budge or change.
How does Forex trade make use of trendlines? People could always draw three different charts with different time. They could draw daily chart based on 1-3 years of historical data, hourly data based on 1-3 months of historical data, and a 15 minute chart based on 1-3 weeks of historical data. Based on the charts they could see how the prices move through the trendlines they've drawn on the chart. It's like having an information map in front of them. To make use of it, people usually buy on the way to the uptrend and then sell it again when it reaches the downtrend.
However, there're several things about trendlines that people should know and aware about. It's useless to always draw it every moment because it's only confusing and it won't provide any help or answer. But never draw any trendlines is also wrong because people could never know what to expect and what will happen. Sure, it has to be re-drawn but not every time the price changes. Some people would prefer to have horizontal line because they don't really like to have it. Everything is about preference and favorite method, actually.
http://forexswingprofit.com/category/trendline-analysis
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