Following the blog post on how to trade using trendlines this is a trading strategy that I developed and that uses the points highlighted on that post.
Keep in mind that at the moment is a trading strategy that I am experimenting with. My ultimate goal is to keep improving it and tweaking it based on the results that I achieve.
My plan to improve this strategy consists of using it first on a demo account on a reduced number of currency pairs and monitor its progress.
First of all, the reason why I chose the EURGBP currency pair was because it just felt like a currency that would be suitable for range trading, since I usually like to trade price reversals.
Next, I checked the weekly timeframe and drew the support and resistance lines. This step told me that the higher timeframe context is that the pair is in a range and approaching the resistance level.
Dropping down to the daily timeframe, I first drew the support trendline, and later created the parallel resistance line that identified the rising price channel. This step told me that the price is currently trending up (but will soon approach the horizontal resistance line) therefore I should probably be biased to only take buy orders.
Finally on the H4 timeframe, I was able to draw a few more support lines, taking into account that I would like to enter into a buy trade whenever price pulls back to these same levels.
I also added the commands to open my BUY trades when price approaches the lines that I drew (according to the Trendlines EA that I developed). The only exception is the D1 Resistance line, that I’m expecting price to reverse at least a small amount.
For my stop losses and take profits, I used 1.2ADR(20) and 2ADR(20) correspondingly. However I intend to manage these targets manually whenever a trade is opened depending on the movement of the price.
If you like my color scheme, you can download it here.
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