Trendlines provide support and resistance to prices, just like old highs and lows, and show you the prevailing trend. But as the smart money positions itself in the market, these may or may not hold, and may even be used to hunt for stop-losses. That’s why it should be used within supply/demand (VSA) context to understand how they should be used. To use the trendlines setups, it’s first necessary to draw the trendlines. To do this:
- Zoom out the chart
- Try to find trendlines with 3+ touches in the price, and which cover 200+ bars
Avoid using trendlines with just 2 touches or which cover less than 200 bars, as they’re faulty trendlines and most of the times won’t hold.
You’ll usually only need to draw them once a week in the pairs you’re trading (or with a lesser frequency, if trading daily), which is also a good exercise to keep track of what’s happening across the different markets.
Sometimes there will be more than 1 validated trendline – draw as many as you can find. We’ll always use the closer trendlines to price for our trades, and use the other eventual trendlines as support/resistance. There can also be none, in which case you have to refer to the other trading setups.