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Trend Line Break Forex Reversal Strategy

The Setup

For short entries, draw a trend line connecting the support bottoms and wait until the support trend line is broken. Always wait until the candle is completed (use closing prices to avoid fake entries). Then enter a short position in the market. Place stop loss 2 pips above the entry candle.

Tip: Download the automated forex trend lines indicator.

Take profit strategy for short positions: When a candlestick occurs whose range is greater than the previous three ranges and whose close is in the bottom 15% of the candle, exit a short position on the FIRST closing price that is higher than the previous closing price. (see example below)

For long entries, draw a trend line connecting the resistance tops and wait until the resistance trend line is broken. Always wait until the candle is completed (use closing prices). Then enter a long position in the market. Place stop loss 2 pips below the entry candle.

Take profit strategy for long positions: When a candlestick occurs whose range is greater than the previous three ranges and whose close is in the top 15% of the candle, exit a long position on the FIRST closing price that is lower than the previous closing price.

Preferred Timeframe’s

1 Hour and above

Currency pairs

Any pairs of your choice

Euro/Dollar 1 Hour Short Entry Trading example

trendline-break-forex-strat

We draw a trend line connecting the support bottoms. Then there’s a 1 hour closing price below the rising trend line and we enter a short position in the market.

The short entry price: 1.2336. Stop loss is placed 2 pips above the breakdown 1 hour candle at 1.2372. Total trading risk: 36 pips.

Profit Target Strategy

We closed this particular trade at 1.2208 for a 124 pip profit.

The EUR/USD short trade

trendline-break-forex-stratprofit

The green square indicates that the exit condition has been met > Candle’s trading range (price high – price low) greater than three previous ranges and a closing price in the bottom 15% of the candlestick. The yellow square indicates the short trade exit. Closing price greater than previous candle’s close.

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