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[mikky]

Trend Trading Setup

Price Patterns:

After a pullback, in order for the uptrend to continue the price must begin to move higher again. Trend lines can often be drawn around the correction, identifying its course; when the price breaks above the trend line it signals the correction is likely over, and the trend is resuming.

There are always multiple pullbacks, of varying degrees of intensity, during a trend. Active traders may wish to participate in many of them, while longer-term traders may only wish to participate on longer-term opportunities.

The main problem with this strategy is that the trendline may need to be drawn multiple times before a breakout occurs. In hindsight it is easy to draw a line connecting the high points of the pullback, but in real-time is can be a challenge and takes practice. The upside is that the reward significantly outweighs risk if the trend continues. Therefore, even if a couple losing trades occur before a winner, the strategy can still be profitable.

Shown is the example of JSW Steel on daily chart. Same can be done on lower time frames like 1 min., 5 min., 15 min., 30 min. etc.