June 7, 2011
Using Automated Trendlines On IG Index / ProRealTime Charts
As regular readers will know, I am a big fan of ProRealTime charts because you can gain access to the Supertrend indicator and a few other indicators that are not commonly found elsewhere such as the Smoothed Repulse indicator, for instance. This is why I recommend IG Index because they use this same platform, and so when you have an account with them and you trade at least a few times a month, you can use this same charting software for free.
Anyway the point I want to make today is that when you use either of these services, there is a useful tool that a lot of forex traders will find useful.
One of the things a lot of traders have difficulty with is knowing exactly where to draw trendlines. However this is no longer a problem because you can now draw trendlines on your chart automatically. These trendlines change in real time and you can use them on any time frame you want. Obviously the longer time frames work better because these trendlines carry more weight, but you can apply them to the 1 minute or 5 minute chart if you so wish.
All you need to do is to click either or both of the two trendline icons at the top of the screen (one gives you horizontal trendlines and one gives you diagonal trendlines). This should give you a chart such as the one below which is the daily USD/JPY chart:
As you can see there are clearly defined trendlines on this chart. The support levels are indicated by a green line and the resistance levels are indicated by a red line, and you can easily make trading decisions based on these trendlines if you so wish.
The trendlines include minor support and resistance lines as well as major lines of support and resistance. The thicker lines are generally the major trendlines you should be paying attention to, and on the chart above the major line is the green horizontal line at 79.14.
So if the price were to fall to this level and you were then to get a strong reversal signal from one or more of your preferred indicators, or a bullish pin bar, for instance, then this would be a high probability trading opportunity.
Of course you may not necessarily want to trade these trendlines in isolation, but when you get a clear trading signal around one of these trendlines (particularly the major ones) based on your main trading strategy, then this clearly puts the odds of success in your favour.