DIAGONAL TREND LINE ANALYSIS

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There's a right and a... well what others believe is the right way. However I have not found many
Traders who really go to the real lengths on how to use them to ones advantage.

Most simply feel that it's to find the Trend direction, which is true... and if the Market price
breaks it that it's an alert to take a trade in the direction of the breakout, which is not true!

And most wonder why they lose when they do this, or have huge drawdowns when they take
these on?

I wanted to find out the best way to use them. And to have a better success rate when trades are
taken on when the market price breaks these trendlines. And of course are in line with other
confluences (other technical analyses): Remember, we need to have a reason to support our
Trade Idea otherwise you are acting on a whim. SO DO NOT FORGET!

It wasn't until some decades ago when I truly understood how price really moves and how
orders are executed. Then all of a sudden it hit me...we had been using these the wrong way all
this time. And no one I have seen online yet explains how to use them properly.

You will be one of the first out of Millions of Traders out there who will know how to use these
properly. And more importantly more than those on Forex Factory! :)

There are two ways to draw in Diagonal Trendlines.

1) From Candlestick High to High (Higher Higher to Lower High) as the price makes it's way lower.
And Low to Low (Lower Low to Higher Low) as price makes its way higher: It's VERY important to
know where you should start to draw them in from.

You'll hear me say from the most extreme High to Current/Local High. Meaning the Highest High
to the present one (Lower High). The same principle is applied to the Low to Lows. The most
extreme low (Lower Low) to the present low (Higher Low).

Once you have drawn these in. We look for interim HH's & LH's to draw from and LL's to HL's.

This is where people stop their analysis! NOoooooooooooooooooo... Stop the madness! We do
not do things by half measures here Ladies & Gentleman. If you want to be Expert in this field.
We go for extra Marks... No Cookie Cutter Copy and Paste here. No Sirree. We make our own
Material! That's what makes us stand out from the rest! :)

There's one more step! We need to OPTIMIZE our Trendlines now.

It's important to know and understand that price will ALWAYS pull back to a previous price to
pick up orders that were left behind. Generally ones that were going in the opposite direction so
they can be trapped into their positions and forced to hold on to them or close off at a Loss.

Human Psychology plays a HUGE role here as with anything in life (This is why I studied it and I
have a Masters Degree in - plus other reasons to study it too). It's a really interesting subject
actually.

More adversity one has had in their life the easier I find it to understand because you can
understand from both sides rather than showing sympathy without the real experience of
understanding a person's situation. I'd rather be talking to someone who's been in that situation
before and not someone who's just trying to relate (I did want to be a Social Worker for
Teenagers back in the day). The more you think about how a person acts and reacts, the more
you will understand how these Market Makers think! Understand why they are doing what they
are doing. And you will never miss a heart beat where the Market Price will go next. It'll be much
easier to figure out than ever before.

Everything you need to know is right there in the Candles. It tells a BIG story! :)

So, optimizing the trendlines... You will notice that You will notice that from time to time you will
see a wick that will either:

a) touch the trend line and go past it.

b) almost touch the trend line.

c) touches the trend line exactly.

And some times when we are drawing our Trend lines in from our most extreme High or Lows to
a local high or low, the last referrence point; the local high or low may have a larger wick on
them, while the others in the middle from the start to the end of our referrence points we draw
them from can be re-aligned to, thus giving us a more refined trend line based on real price that
was not in any way forced to pick up orders; thus giving us a true represenation of price
sentiment. Cool eh? :)
These bigger wicks at the end of our referrence points before re-alignig them tells you where the
price has over shot an area before pulling back. These are classical elements, as tiny as they may
seem is an indication of where price is being pushed to, to pick up orders before moving back to
the sentiment that was previously created/followed.

It's these finer areas that people overlook, or do not understand thus not paying attention to it.

And now you are a small group who do understand and you're going take advantage of it! :)

As we find these optimization points to re-align the trend line to, we start to see how we can
adjust our trendline to these middle points while they line up to the areas where we drew our
referrance points from.

We now have an equilbrium of sentiment, if you will. And when price breaks and CLOSES
above/below this trend line (depending on its direction) you can now read how to safely take
that break out where the candle closes above or below the trendline.

However as I said before and repeated many times over. Our next step is like as if we are crossing
the road. We look left.. then we look right and one more time before we cross the road. This is
no different. We're looking for evidence now to support our notion of following that break out.
We look for confluence.

Example: Did the break out happen on a Support/Resistance, Supply or Demand? If it did. What
else do we look for. Keep looking for answers. One of the rules that I go by is to see how far in
the trend we have come. Thus accumulation levels, distribution levels; phases if you will. How
many were there when we see the break out.

Rule of thumb is 3 of each, at minimum, there can be as many as 5, 6, or 7, or even 8

accumulations or distributions. When there are that many we know straight away the market is
either overbought or over sold and we don't need stupid indicators to tell us this!
I'll also look for the line of sight. Is it clear to go ahead? Example: is there any noise in the way.
You may have heard me talk about the path to least resistance?

Meaning there is no previous accumulation levels or distribution levels in its immediate way. So
when we are calculating say; compression channels and we have predicted a 60 pip TP. Ask
yourself is there enough room to reach it before one finds themselves moving near the previous
stated areas. Example: you're not going to fullfill your TP of 60 pips if there is a brick wall in the
way that's 30 pips from the entry. You'll find price hitting the wall and coming back.

Stay one step ahead of the game. Plan your moves just like you would playing Drafts or Chess.
It's the smarter thinkers and those who think out side the box who win!

2) The Second way to draw in trend lines: This time we draw them in from body close to body
close!

END OF SNIPPET