I want you to think about a wall. Think about what a stone wall would like that protected a city centuries ago. Or maybe the wall around a castle.
Got it?
Now mentally you have this wall and now picture an invading army attempting to breach it using a battering ram over and over again. The army is trying to breach this wall. If it can get in, it has a chance to defeat and occupy this city.
If the city wall is stout and the city's defenses are intact, the invading army will be repelled and sent packing.
Well fellas, a diagonal trend line is just like that. In the case of going long, the candles go up and hit the resistance levels, the candles will either blow through it (known as a breakout) OR hit it and fall back (known as a reversal). They will only do one of these 2 things.
So how do you trade when the price (candles) are getting near or touching the diagonal trend line?
Cautiously.
So the problem of determining whether or not the trend line is going repel price or if price is gonna blow through the wall must be clear when we are trading. But how? We don't use no crystal ball when we're trading...son!
Simple. Drop down in your time frame to the 1 hour chart (time frame) and draw a box around the candles that are now bunching (consolidating) together, usually right next to the trend line. Draw it around the high and low points of the range. When price determines which way it wants to go, it will explode out of the box you drew...this is known as a "breakout".
These breakouts will then either blow through the trend line or be reversed. Enter at the very beginning of the second candle. What is the first candle you ask? It is the candle that blew out of the box you drew.
These breakout from the 1 hour chart can amount to 50 to 200 pips easily.
Here is a video for you guys. I realized that many of you don't have girl friends so here you go, turn your teddy bears away from the monitor.
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