Trend Lines are one of the most common and powerful trading methods. They have appeared at the markets for centuries and consistently predicted reversals and generated profitable signals. In this tutorial we will describe how to identify trend lines properly.

Tip 1: Demand At Least 2 Bounces
Always demand at least two bounces on a trend line you wish to trade. A bounce occurs when price touches the trend line and bounces in the opposite direction. A trend line is only validated after price has tested it twice - and a trade may only be issued after the 3rd test and after price confirms the reversal.
The more times a trend line is tested, the stronger it is and the more powerful its trades will be. A line with 4 tests is much more reliable than one with only two tests.

Tip 2: Demand Strong Bounces
A trend line validity is confirmed with the strength of the bounce that occurs when price touches it. If price touches the line and retraces slowly it is a sign that it is weak and should not be traded. This shows the trader that the psychological idea behind the line is not strong and there is a high chance of breakout.
Always demand that price bounces with strong momentum when it touches the line - so its strength and reliability are confirmed.

Tip 3: Chart Patterns
If a trendline is a part of a chart pattern it can change the trading view completely. For example, one identifies a line, but When inspecting the general chart one sees that it is a part of a triangle chart pattern. This pattern is an unreliable pattern that is rarely profitable. The trader can now ignore the trendline without doubts and avoid the loss. Watching the entire chart and looking at the bigger picture can lead to different trading conclusions.
It is also advisable to confirm trades with higher timeframes - as sometime the technical constellation can be very different.