Do Trendlines work?

Here is a chart of GBPJPY which has been trending down.

You can see that there have been 2 places to make money.

One is if you traded short when price bounced off of the downward sloping trend line which has acted as resistance that price has respected so far.

The 2nd would have been when price bounced off of support which again has been respected by price so far.
 

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Quote from oraclewizard77:

Here is a chart of GBPJPY which has been trending down.

You can see that there have been 2 places to make money.

One is if you traded short when price bounced off of the downward sloping trend line which has acted as resistance that price has respected so far.

The 2nd would have been when price bounced off of support which again has been respected by price so far.
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Here is a brief annotation. I used an arbitrary scaling on the 60 min chart.
 

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Quote from cd23:
For example, smart money is the leading indicator of ES price. Forex leaders are obtained by having a cyber model of the forex of interest. snip . . .

A volume substitute is required for Forex so I use three.
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Here is the EUR/USD chart. Time is East Coast to help compare volume/activity with the US market hours.

What could be used for a leading indicator? Cyber model? There are both spot and Futures FX contracts. Something along those lines or a more complex composite model?

Didn't have time to put in volume gaussians but not sure if they're applicable based on ticks (which I assume this chart volume is based on), though you can see some obvious correlation. What can be used as a substitute for volume? In the lower window I put in a one period ATR to look at the bar volatility as a possible substitute in addition to the tick volume.

What volume proxies do you find helpful?

You mentioned you're usually on the 5min chart, many tend to use 1 hour, or longer, and 15 min at minimum in FX. Guess it would depend on the liquidity, and time of day would be a big factor there. 5 min looks fine on the EUR/USD

Regards - EZ
 

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Quote from cd23:

Here is a brief annotation. I used an arbitrary scaling on the 60 min chart.
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Are you an engineer?
I am not really sure what the hell all of that annotation is.
All that to look at price action?
Please don't even try to answer this or explain as I am sure another lengthy answer that is too long to follow would ensue.
(no offense)
 
Quote from tradersaavy:

epetrov

This is a great chart example

On the daily timeframe, one could look at a chart back to at least October of last year and see clearly that the 40'ish area is resistance.
Well, even recently price has gotten just under 40 and retreated. Currently price has retreated and is at this very clear uptrend line that you noted on your chart. Here is where a trade opportunity could exist.

1. Continue with the "price is going down" sentiment and look for a short under the trendline. See chart #1

2. On a shorter time frame look at the trendline as a support area and go to a smaller timeframe to look for a long. See chart #2
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This setup worked as in a book ;)
Only the prices jumped over the entry point.
:confused:
 
Hello Guys,
which is the valid TL?
It seems that the valid TL is this one which is still not broken. How do you think?

P.S. I'm about to go long with EBAY till 35 USD.
 

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Quote from epetrov:

This setup worked as in a book ;)
Only the prices jumped over the entry point.
:confused:
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Here is the chart, updated, with some notes on the short.

Also, there is a good possible long set up, RIGHT NOW.
Price has bounced from support (34) and is breaking the downtrend line. A possible entry could be over the swing high around 35.25 - 35.50
 

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