West Texas OilEducation
Something about trend line
Updated
Most of the traders face one major problem in trendline, why the candle breaks my falling trendline but still going downside?
Most of the time isn't about plotting the wrong trendline, but how we analyze it.
First, we must remember the market phase,Accumulation, Re-Accumulation, Distribution, and Re-Distribution.
Second, determine incline degree of a trend. The lower degree tells the slower speed of a particular trend and vice versa for the higher degree.
For example, I draw 3 trend changes in the chart, Blue is the first upward trend, Red indicates the second downside trend, and Green, the upward trend.
Red Trendline is the first trendline of the trend, Green second and Yellow Third.
Before a trend rides a rally, it will go through one of the 4 phases. Before a trend goes like a roller coaster, the market will start to accumulate a huge amount of trades.
Hence we will see the first trendline usually (not all the time) will go slower than the next trendline, the slow trend.
When market accumulates enough orders, it will start the rally, then we will see the trend starts incline more than the first trendline, the first trendline will not going to be acting as resistance/supporting trendline, but the second trendline (green) or the third trendline (yellow) will.
No matter how many trendlines are broken in a trend, as long as the first trendline (red) is not broken, there's a high probability that the market is still going the same direction.
Example, look at the falling trend (red boxes), even the market breaks the second and third (green and yellow) trendline but the trend is still going downside.
Take a look at all the red trendline. Once the candle breaks the red trendline, the market starts the rally.
The moment we enter trades right after breakout + retracement, we are riding on the fast trend.
The slow trend is part of the Accumulation/ Distribution phase, it's not worth taking the risk in one of these phases.
Most of the time isn't about plotting the wrong trendline, but how we analyze it.
First, we must remember the market phase,Accumulation, Re-Accumulation, Distribution, and Re-Distribution.
Second, determine incline degree of a trend. The lower degree tells the slower speed of a particular trend and vice versa for the higher degree.
For example, I draw 3 trend changes in the chart, Blue is the first upward trend, Red indicates the second downside trend, and Green, the upward trend.
Red Trendline is the first trendline of the trend, Green second and Yellow Third.
Before a trend rides a rally, it will go through one of the 4 phases. Before a trend goes like a roller coaster, the market will start to accumulate a huge amount of trades.
Hence we will see the first trendline usually (not all the time) will go slower than the next trendline, the slow trend.
When market accumulates enough orders, it will start the rally, then we will see the trend starts incline more than the first trendline, the first trendline will not going to be acting as resistance/supporting trendline, but the second trendline (green) or the third trendline (yellow) will.
No matter how many trendlines are broken in a trend, as long as the first trendline (red) is not broken, there's a high probability that the market is still going the same direction.
Example, look at the falling trend (red boxes), even the market breaks the second and third (green and yellow) trendline but the trend is still going downside.
Take a look at all the red trendline. Once the candle breaks the red trendline, the market starts the rally.
The moment we enter trades right after breakout + retracement, we are riding on the fast trend.
The slow trend is part of the Accumulation/ Distribution phase, it's not worth taking the risk in one of these phases.
Note
The candle stopped pushing downwards due to price unable to break the first trendline (red)
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