Sometimes the currency pairs are trending in a channel. Our first job in this case is to identify the channel and draw its support and resistance lines. For this purpose we need two points on one side of the market and one on the other side. You can see on the chart above that we draw the support line by crossing the pints 1 and 3. Then through point 2 we draw a parallel line which is our resistance line. Then we wait for the pair to touch one of the lines and generate buy or sell signal. If you prefer you can trade only in the direction of the trend which is up in this example. For every position we use 7-8 pips stop. Half of the position is closed for 10-12 pips profit the rest is close on the opposite end of the channel.
On this chart you can see how a trendline break could be traded. Three consecutive periods have matching lows near or below the support line. In this case we place sell order 1 pip below the lows with 8-9 pis stop.
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