The trend is your friend unless it ends.
Traders LOVE trends. We would dress them up in tutu’s and read them bed times stories (just me?). Even those that say they don’t trade trends trade trends.
A thrust on one level, is a trend on a level lower down. Is anybody getting horny talking about thrusts? I digress.
Because trends can make you so much money, there is a plethora of tools (there I go with the phallic references again), to try to determine the trend.
We have signal lines, moving averages, Ichimoku clouds, linear regressions, triple exponential, super smoothed, weighted blah blah blah.
It’s all unnecessary, just convoluted squiggle stuff for the sake of it. Like a child with crayons drawing on a wall.
You want to know the trend? Learn what a high and low is, draw two lines and apply grade 2 geometry.
Here is a typical chart that could confuse. It doesn’t matter what the chart is of, just that the trend seemed to be down, yet we are retracing. Is this a retracement in a down trend, or is the trend switching?
The answer is simple, can you draw an unbroken down trend line? Yes? The trend is down. No? it is up or sideways.
With this in mind:
So in this time frame window, every down trend line has been broken, yet two up trend lines remain. The trend is up.
Even though we have barely retraced half of the move down, I am long until I can’t draw an up trend line any more.
What if you can draw both like this one?
Say it with me. The trend is sideways, and we have a nice triangle set up to earn dollars and forum credits with.
Two lines. That’s all.
Remember though, trends are like arse holes, they are big and small and cause you to itch like crazy.
We know the trend on this time frame, the same technique (overstating it to call it a technique really, we are just drawing lines) can be done quickly above and below the time frame of your choosing to get a better trend picture.
Over simplified? Maybe, but I earn a living from this over simplified technique (there I go again), and it doesn’t tax my tiny little brain.