Wednesday, June 29, 2005

Why Trend Lines Irk Me

Trend Lines

The above is a 5 minute chart of the Euro (EURUSD). I've drawn what I think are all reasonably valid support and resistance lines, and trend lines.

You can't trade with all those lines on the chart. There's no room anywhere for a decent profit between lines.

So maybe you won't agree with my placement, and that's one of my points - these puppies are mostly subjective.

It doesn't really matter anyway. Sure, on occasion the lines act as valid support and/or resistance levels. But when it feels like it, the price justs busts through them like they weren't even there. Because there not actually there, I just drew them on my computer.

Your (well, my) trading systems need to work without considering these "lines". Or at least create a way to identify the major ones mechanically.

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