It is well known in the currency trading world that the trend is your pal and any currency trading method based around following a trend is probably going to be both easy and effective.
It is really easy to form trend lines on any forex chart, but most people prefer to use candlestick charts for this because the candlesticks are such a clear visual signal. The first step in using trend lines for a foreign exchange trading technique is to establish whether the market is rising, falling or is stable inside certain parameters. Naturally there will always be fluctuations, but at particular times you will see clear patterns.
1. If the price is rising
If the price is going up, first draw a straight line thru the highest highs on the chart. This line will be sloping upward. Then draw another line through the lowest lows on the chart. If this line is also going upward and is roughly parallel to the 1st, you’ve got an rising trend.
You can then use these 2 lines as support and resistance lines. This implies that you can assume that while the trend continues, the price will remain in the area between these two lines. any time that the price hits the top line you could sell, on the assumption that it’ll fall back. In a way this strategy means going against the trend, but you would only hold that position for a short time. However, you should keep in mind that there will at some point be a true reversal and you could be caught out by this.
2. If the price is falling
If the price is going down, you can follow a similar methodology to the prior system.