Most traders think that they can predict the future analyzing only price patterns. And that’s true but not easy!
More than 100 years ago Dow Jones wrote about price and trends in the wall street journal. He discovered that price moves in trends. He talked about 3 levels of trends (main, medium and short) and also said that when an uptrend finishes it is because a down trend is starting.
Nowadays, a lot of traders still follow this old theory. But…
Can we still believe in trend lines?
Yes, we can. But we need to look for some currency where trend lines are working fine. Today, I’ll show you a daily chart of EUR/AUD. I trade it only with trend lines and trailing stops and it works fine for me.
In this first chart you can see 4 clear trend lines. It was on 2012. How about today?
In 2013 we can see this chart in EUR/AUD. As you can see in the daily period we can work with trend lines and even channels easily. By contrast, I never use trend lines on GBP/USD because it is a ranging market and I don’t know why, but trend lines are not as good as here, so why should I lose my money there?
I search patterns, but I also test my pattern theories with past data. This is the key to work with price patterns, look for the correct market before trading and test it!
Where do you use trend lines?