Diagonal Trend Lines, the Proof

Do Diagonal Trend Lines Work?

So you are skeptical whether a diagonal trend line works are you? You better be. The thing to remember is that a line, whether it be a horizontal line or a diagonal line, is either a support or resistance area.

A line is gonna be tested. It will either hit it and reverse or hit it and go through it. Rocket science? No but we dang sure find a way to make it hard don't we? Here is some good advice...

Stop over complicating it.

Tyler Durden approved

Now let's look at a chart. The other day I posted a chart where the price was hitting the diagonal support line. It was either gonna bounce off of it or penetrate it. So let's see what it did.

Again, Daily chart.  GBPUSD pair

You're gonna need to click on the picture to make it bigger so you can see it but here's the deal...it broke through support so now it will drop much more. Expect a pullback which should go back up to the diagonal trend line but not penetrate it then really drop nicely.

So, how do you trade this?