Understanding Trend Lines | learn To Read A Forex Chart

Alan Solar, the passive income guru, in this video tutorial explains to you how to draw trend lines on your chart. The Fibonacci and know what structure is within the Forex currency.

Let's start again. Okay, so the top left hand corner, you've got H4. So if you just click your finger on H4, please just change the time frame to H4 and hopefully your, your, your chart looks like my chart with all the, the moving averages and the candles in the correct color. And your charts are in the correct color and you've got your stochastic at the bottom here. I've added another indicator which I'm not going to discuss today. It's a very exciting indicator. I'm still getting used to it, so I'm not an expert in it, so I cannot teach on it at the moment. So just ignore it. Okay. I refer to these little up and down purple arrows. Just ignore those, that, that indicator for the moment. Okay. So you can just pinch your screen together, please. Let's try that again. So pinch your screen together to zoom, to zoom in and out. And we want to be zoomed in. I hope that you saw that. And let's turn the phone sideways and let's look to the right, to the left, the left. And what we're going to look for is, we're going to look for the price bar again. The, the price is. Yeah, this, okay. The red and white. So if I move my green line, if I move my green line, you can see that that's the price and what we're looking for. When you see the price in your, in your screen, you need to be, you need to zoom in and you can see that there is a channel here. So let's zoom out and bring a green line down. So there's a channel there. And how you draw a line is you put your finger on the screen and then you click on the triangle, the circle and the square. Okay, Triangle, circle and square allows you to draw on your chart. So you click on there and then here are your objects or at the bottom, these are so the different things that you can do. So this is your Fibonacci. This is an angle. Please, can you mute your phones? Guys, mutual.

Microphones. And then here you've got a diagonal line and here you've got a horizontal line. So we're going to use the horizontal line to create the channel that we're in. Okay? So what we're going to do is we're going to draw another structure, okay. So that we can see exactly how this channel is forming and the price is going to travel within this channel. When it travels outside of this channel, you know that the structures being broken and there's going to be price action. So here it started to break, okay. And then it immediately retraced down. So the candle opened up here and then closed down here. Okay. That's why we only trade when the second candle breaks above the atma. That's basically why, because we have these false positives. Okay? So the second candle above the atma here is the first candle. Here is the second candle above the atma. Okay. And then I would have entered the trade over here going in the long direction. Okay. Just by the way. So if we're in the structure over here and you're waiting for the candle to break out, there are two ways that you can do this. Number one, as the. If it travels five pips out of this channel and above the highest candle within this channel, you can then go long. Okay? That's basically what it means. And you need to, like, know that it, if it does retrace and it goes into negative, you may need to close up their trade in negative because it may go up there. And then as you can see, retrace all the way down to here. And if you've got big lot sizes, that can be hundreds and hundreds of dollars. So if you're trading a 56 lot, that, that could be quite serious on your account. And you need to manage that and be proactive very quickly. Okay. Otherwise you'll blow your account. So this is what we call a structure. And how you draw these lines. Let's zoom in a bit more. Is you draw it. So a structure is formed when two or more wicks or candles are touching that, that line. So you can see that I put it on the lowest candle over here. And when I go to the right, you can see there's only one wick. It's this wick over here that's touching this candle, this. This line of support. So that's not the correct structure. So we need to go maybe here to this one over here and see if it's a little bit lower.

So it's about there. Okay, cool. There we go. Okay. So you can, when you put on, when you put your mouse, your finger onto the green line in the. In the left hand corner, in the right hand corner, there's a circle. That means that that line is activated. Okay. And you can move it up and down. When you click it again, you. You'll see that that dot disappears and now it's deactivated. So when you put your finger on the screen, those lines don't move. And it's very important that you deactivate these lines, otherwise you've got to redraw them, which is a pain. Okay, so we're now looking at the bottom structure to see how many times it hits. Okay? And as you can see, it's only once over there and twice over there. So it's only twice, I would say three times is like a structure. So I would say there, okay, there's your structure. Okay? Yeah, you've got your points that are touching. So there's a lot of candles. So that is the support line, okay. When the price travels 5 pips below this candle, okay, this week or this week, that's when you would enter the trade, okay? To go south. Are you with me? Okay. So you can unmute yourself and you can ask questions. So we're going to do the top, we're going to do the same for the top. Now we're going to look for structure in the top. And you can see there's this structure over there, okay, Their structure. So in the top you can actually. And you can draw multiple lines. Unfortunately, we don't determine what the structure is. The banks change it. That's why there are different lines and they do that purposefully to stop you out. Okay? So let's understand what's happening in the market. It's very important to understand why we drawing these lines and why you need them. So Forex works on supply and demand, like everything, okay? The more people that want something, okay, the higher the price. The less people that want something, the lower the price. So what the bank will do is they will then, let's say they put in a buy order. So they place a buy order, place a billion dollars, okay, to move the price, the price goes up. What's going to happen is, is that at a level, at specific levels, you must remember there are millions of Forex traders out there and there are people sitting with stop losses, buy limits and buy orders, okay? Or sell or sell orders, rather. If we're going in a long, long direction, there's all four, okay? We're going in a short direction, there's all four. So what the bank is doing is they spiking it up. Then what's happening is, is that other people's stop losses, buy orders, sell orders, okay? Buy limits and sell limits are being activated now. It's a tug of war, okay, between the amount of who has the more of what, okay? When when the price starts spiking, the bank then knows that the stop losses have been activated and there are no more stop losses, okay? The buy orders have been activated. The sell orders have been deactivated because they've lost because we're now in a bull market, okay? And the price will then start to rise. The bank will throw in another billion dollars or more and the price will start spiking. The public then see that the price is spiking. They will then jump on the bandwagon, okay? They will then move the price up further and the bank then benefits. The bank initiates it, causes the havoc, the stop outs, okay? Then the public then follow the trend and then the bank makes all the profit and then they do the same in the opposite direction, okay? So unfortunately there are many different positions of this, of this channel. So there is a channel, okay? And you need to be drawing these lines so that when the price breaks those lines, you know why it's broken those lines. So there's another channel. You can see all these little price points over here. And it's because the banks are trading on different time frames. So you need to check those different time frames. Just easier to see on. And I like to Trade on an H4. You need to find like whatever timeframe works for you, but for me. And then over here on the right, just deactivate your lines so that your lines are there. Right? So now we've got this channel over here. You can see the price is over here. So why is the price there? Okay, so we need to go further left to find out why the price is there. And there it is. So here is your support line. Here is your support line and your resistance line. There it is. Okay, now your points. 1, 2, 1, 2, 3. And, and then if we go left, we'll probably. Let's zoom in a bit. There's another one over here. You can see it over here. There's your structure. And then we can go a little bit to the left again and you can see your structure there. And there is more over there. So we now know, okay, that this structure is a structure, okay? And price is being stopped there. So this is very important to note here. Check when I draw another line. Right, so there's the other structure. So it's not much of a support. It's only three candles. Okay. So I would say when the price drops below this line over here. So we're going to work out the pipage. Okay? It is 8:12. So let's, let's get a, another line we're gonna draw. Okay, let me do that slowly with you.

So you click on the circle, triangle, square, and you choose the diagonal line. This line over here so that you can draw a diagonal line on your chart. And you're going to put it over there and you're going to drag it down to here and you're going to work out the pips. But before we do that, we're going to deactivate our lines so that we don't draw on them. Okay. So there we go. We're drawing. There's the. In fact, let's draw to the end of the week over there. And let's place this one on the price. There's the price there. Okay. So if you look in the top left hand corner.

Top left hand Corner, you've got 29 forward slash 249. Okay, 29 forward slash 249. 278. So that means. So let's try again.

Try and take a picture.

There we go. Okay, zoom in right there. This number here. You drop this number. Okay. It's 18 pips. It's 183 points. That's what it is, 183 points, which is 18.3 pips. That's the distance.

That's the does. Let's. Let's keep it. Save to photos. Cool. Let's keep it. So that's the difference. That's the. It's a little bit more. Okay. Because I'm below the line. Oh, God. All of the. Okay, where are we? So we were on price. Right? Right. So there it is.

So it's 13.8 pips from the price we are on now until the. The. The over open and close price. Okay. The price might go down a little bit more. And that's where I think you should be entering the trade, which would be here, which is in 30 pips time. Rather be conservative. Rather make sure. Okay. No need to gamble. It's only a few pips that you're going to lose. Remember yesterday I made. I made a tragic. Okay. On Monday, tragic era where I didn't enter the trade soon enough. I could have tripled my account. And I'll show you. It's. Just zoom this in. I'll show you where I entered. Where I entered the trades with the ea. So I entered the trades like I think it was about here. That's where I entered the trades. Initially, four trades opened. And then I only woke up. Okay. Yeah, that's where I woke up. I missed this whole move. I got confused. You know, some days you get confused. I'm one of those oaks confused. So it just is what it is. Won't happen again. I've learned my lesson because I lost, I lost thousands of dollars, okay. Because I only made, I only made money from here down to here. And it was like 200 or $300 because I closed out my trades and I also did that incorrectly, which I'm going to show you how to improve on that. Okay. And that's what's nice about these webinars that we can reflect backwards. Okay. Think about the strategy that we use and then change the strategy and improve it, which is fair. Okay. And that's one of, one of the, such a huge advantage of being part of our, my, My Telegram channel is that you with like minded individuals, professional traders that understand how to read a Forex chart and they've got different strategies to what I'm using and we can put those strategies together and come up with better strategies. Cool. So the next indicator I want to show you is what is called the Fibonacci. Okay? So Fibonacci is basically this is our Fibonacci works. It's, it's, it works in nature and it works everywhere. So it's 1 plus its preceding number. Okay? So it's the preceding number plus itself, basically. So it's 0 plus 1 is 1. Okay? So the next number is 2. So 2 plus 1 is 3. 3 plus 2 is 5. 5 plus 3 is 8. 8 plus 5 is 13. Okay. And it carries on like that. And if you draw it out, it's basically a spiral. Okay? And this mathematical equation is not a coincidence. And it works everywhere, okay? Everything in life works on this Fibonacci scale, including Forex. And there are key places within the Fibonacci scale, Fibonacci scale that you need to be taking care of and knowing what to do. So how do you activate your Fibonacci? Okay, so let's activate the Fibonacci on this, on here. So you go to, to you go to your triangles, triangle, square, circle. And here it says Fibonacci F and it's the F with the lines going across. So you click that one. Okay. And then what you do is, is that you draw from the lowest to the highest or from the highest to the lowest. So in a bear market, you're drawing from the lowest to the highest point. And it's an approximate figure. It's not like 100% accurate. It's like that's it. So yesterday I was said to you that we're on a key level of 78.6 and the price may reverse at 78.6. So there's a lot of traders that use the Fibonacci, the banks included, and it's a very good indicator. And when you get to these levels, I don't recommend that you trade, rather get out of the market, okay? Be conservative. You don't know what the direction is. I mean, you could be here, you enter the trade on a short, and then all of a sudden, because you're on a 78.6, the price spikes. So the levels are key levels. 38, 50, 61, 78, those are your key levels. And it can and depends on the market, the banks, the government, the president, okay? These structures may fail. So generally they work and they will help you and assist you to make an educated decision on the direction of the market. And rather, when you get to these levels, rather get out, take your profit and go wait for the next trend to start, then get back in. Very, very simple. Just remember, guys, forex is simple, okay? It's not necessarily easy, but, but it is simple. If you follow the guidelines, okay? And you use a little bit of your, your mind, you'll make money here, okay? So it, the problem here is greed. You're seeing blue and you're saying, oh, I can make more, I'm going to make more, my God, I'm going to make, I'm going to triple my account. And then five minutes later, because you didn't have these indicators on the bank, sparks the price. And we've seen it before. Let's go back. Let's go. I mean, look at the size of some of these candles. There's a big candle that's huge, okay? Bank can do that in five seconds, you've got no hope. All the profit that you gained is gone. Yeah. I mean, look at the size of this candle. It's massive. Okay? So you need to, you need to really be using these indicators and, and getting used to these indicators. And you, you need to be vigilant in reading the indicators. No point putting them on your chart and then ignoring them and saying and getting and romanticizing your blue. That's, that's.

You know, there's a saying in business. How does it go? It says, I can't remember. Oh, turnover. Turnover is vanity, cash flow is sanity and profit is reality. Okay? And you need to like really, like, think about that. And like the profit that you're seeing is not profit yet until you've closed your trades. So don't romanticize the blue look at your indicators. And that's the reality. Reality is the indicators. That's your cash flow. Okay. And you need to be watching that very, very carefully. And let's continue. Right, so how do we remove it? You can click on here on the triangles, square and.

Circle, and then you left. From right to left, you go across like that and you delete it. To draw it, you click on the top, on the F. So let's go back.

It's actually bottom to top.

And you go from the lowest point to the highest point, and that will be your trend down. Okay, so there are your lines, and your lines are drawn for you. Your points of support and resistance are drawn for you. And if you actually go back in time, you can go and see where your lines are actually hitting, and you can see that they are lines of support and resistance. So have a look how many times it hits. The Fibonacci, goes a little bit below and then boom, goes all the way up, finds your support here and then up. Can see that there's a channel there. It's. There's method. There is method in the madness. There is structure here. You just need to know how to. How to read it. Okay, right, so now do you know how to apply it?

I'm on Android. It doesn't look exactly the same as yours. So do we pick that Fibonacci channel?

Yes, there's two. There's two types of Fibonacci. There's one that works this way and there's one that works this way. So we want the one that draws horizontal lines, not parallel lines.

Yeah, I've got. Actually, I've got. I've got 1, 2, 3, 4, 5. Fibonacci time zone, Fibonacci fan. Fibonacci.

It's not the. It's not the fan. Okay. It's not the channel one. I'm not 100% sure. Let me just go here and let's go and see where the indicators are.

So if you click on add object, you've got your different. You've got your different Fibonacci. So it's. There they are. Okay, so we want the Fibonacci retracement. Retracement, yeah, we want the retracement. Okay. Which is your horizontal lines. You can see the lines are going horizontal, not parallel lines. Not the fan, not this one, not that. Okay. I don't know what the tension is. I've never used it, so I only know the. The Fibonacci retracement. Okay.

Cool. Cool, Cool. Okay, so now what we're doing is we're waiting for the.

For the price to drop below the structure over here. Okay? So when the price. So we can go to a lower time frame, like a D1, okay. Or even a 30 minute, okay. And we can wait for. There it is. It's right at the bottom, so you can't really see it. So maybe H4 is best. So what will happen is when the price moves down.

All your candles will. The position of everything will move up and so you can watch the candle going down. So when the candle actually goes below the structure, five pips or 10 pips, okay. That's when you can enter the trade. Very simple. It's broken structure. It's going to the next point of resistance or support. So we need to go and find that. So we go and go back in history and say, right, so if it breaks this line, where is it going? Where's it going, guys? Where's it going?

Going to the next support resistance line. Okay, and your next support resistance line. This is why we can trade with risk. Risk management. You draw your next line in. It's like here, there you can see point of, point of support, resistance here, support resistance there, there, here. So we know that that's where it's going to stall. Okay, here's another one. It's not great. It's not a channel. Okay. It's just points that are being hit. You can see here, here, here. But it's like it gets to that level and breaks through like there's no channel. This is a channel there. Yeah, that's a channel. So let's draw that. Let's draw that channel there so that you can see what I'm talking about when I say channel there. That's a channel. This. That's a channel. So it goes up, comes down. Goes up, comes down. This is just trending. This is just trending. That's a. That's a trend. That's. That is a northerly trend, southerly trend, sideways, sideways trend. Get to understand your trends again. Get to understand what the bank is doing. Why are they doing it? So if you see it, like jumping up and down within a channel, you need to know something's going on. What are they waiting for? Why are they not doing anything? Okay? They're just messing with your mind. So you need to, like, dig and delve and say, okay, let's go look and see why. Okay? What's going on in the market to. So that we can make an educated decision. So.

I don't usually use the yellow, the orange indicators, okay? They low impact indicators. That means when there's an announcement it doesn't impact the market so much. So in the top right hand corner you can click your gears, you can click on your impact impact. Okay. And you can disable low, no impact low and medium. Okay? Go back, hit your left mouse button back, mouse button back. Okay. And click. Okay, so, so here's MyFXbook. Okay? And it's got the, it's got the, the announcements over here. And then if you, if you click on it and then you click on the wording you can scroll and read and it says there. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Generally speaking, a decreasing number should be taken as positive or bullish. So a decreasing number from this number means that.

There should be that it will be positive or bullish for the US Dollar. Okay, so this is a more than number. So you can expect what? You can expect the euro US dollar price to do what? Please unmute yourself and answer the question.

Let's read it again. A larger than expected number indicates weakness in the market which influences the strength and direction of the US Economy. Generally speaking, a decreasing number. So a number less than 211.

Should be taken as positive or bullish for the US dollar. So please unmute yourself and tell me what is going to happen to the direction of the euro US dollar?

Does nobody know?

Okay. No. Do you know it will go up? So if the number okay is more than 211, okay, then the price of the euro US dollar is going to go up.

So when you look at. Okay, so let's. So now we know one indicator is telling us that the price is going to go up. Let's see what initial job loss claims mean, which is obvious. Okay. It's the jobs in America. If there are less jobs available, okay, that means there are 216,000 people that are unemployed as opposed to last month's or 214,000. So it's gone up by 2,000. So there are 2,000 more people that are unemployed. Is that good or bad for the US Economy? Unmute yourself, please answer.

If there are two.

Bad, it's bad for the US Economy. So we can the dollar. So then the euro US dollar price will do what.

Go down? No, it'll the US Correct. Okay, so okay, so that, that's where the confusion is. Okay. When you're looking at the currency, you're looking at euro US dollar. Okay? It's the, this is the base currency. The base currency is euro. Okay. So it's sort of like opposite to the announcement because you're looking at a US dollar announcement.

So if the US dollar strengthens, then the euro, US dollar price will go down because the euro is deflating against the US Dollar. When the, when there's, when the economy in America is strong, okay. That means the US economy is stronger than the euro currency. So the price will go down. The euro has deflated in value against the US Dollar. When something good happens in Europe, okay, Then the price will go up. Are you with me? I hope so. Please ask if you're not with. Groovy. Okay, so now we know that this is okay, so it's all good for the, for the, for the US Dollar. Is it good? So larger than expected number indicates weakness in the market. Generally speaking, a decreasing number should be taken as positive or bullish. A decreasing number should be taken as positive or bullish. They're both saying that they're going up, okay. Because they're saying that it's 216 which is going to weaken the US economy. So both these indicators are saying that the euro, US Dollar, the US dollar is going to deflate in value against the euro. So now we know would be, would it be a good idea to buy or sell the euro US dollar at this point?

Buy. Correct. But we're not going to do anything because the announcement hasn't come out yet. So we can't base, we can't make a decision, okay. On anything until there are numbers here in the actual actual consensus previous.

Okay, so the markets, speculators, economists, banks, their spokespeople, they're all saying this. That's the consensus. The actual. We're waiting for the actual numbers to come out. When the actual numbers come out, then we'll get, possibly we'll get movement. And if there is movement, then we'll know why there was movement. Okay, are you with. And sometimes the price goes in the total opposite direction of the news because the banks want to get more value. So the news may be good, but what they do is, is that they'll spark the currency up to let's say Fibonacci level of 60, 61.8. Okay? And then they'll just drop the price and it'll just start cruising down, okay? And they usually do that when the UK closes. So when the UK forex market closes, South African time, 5 o'. Clock, okay.

The only market that's open is New York and they dominate and they control the Market there often. That's why you see These spikes from 5 o' clock until 10 o' clock in the evening because nobody's trading. They the only market open. Okay. So according to the news, the price is going to go up when the price breaks the 78, I would wait until it actually got to 109,785 before I would start placing trades. And I wouldn't even do that. Okay. I would wait until the second candle opens above the 8 exponential moving average. Right. This is the 8 exponential moving average over here. Okay. So the price in the news in two hours time or whenever it is comes out. Right. So the candle goes down, goes down a bit. Okay. And then reverses. So there's your one candle that's closed above the 8 exponential moving average. Your second candle opens. Your first candle opens. This is your first candle. It's the wrong color.

It's your first candle that opens. Hopefully it's green and it closes. Green above. Your second candle opens and goes north. This is where your bar, your buy is on. Your second candle that opens lb second candle. I've changed it. Not the first candle, the first candle. We're getting too many false positives. So this is the beginning candle. So it's the second candle that opens above the 8 exponential moving average. And we will go to the next support line. Okay. The 200 moving average is the next support line. Okay. So it may go there, drop down to the 78, go back to the 61, drop onto the red, go back to the 50, drop to the yellow, go up to the to the 150 over here, the 200 on the H1 and then carry on going north. Now here's the trick. Okay. This is what you need to be knowing when you want to be trading with the ea. So that's the end of the webinar. Hope you got amazing value from that and understood how to now draw your Fibonacci and your trend lines and how you understand structure and why there is structure and know that because there is structure that you can actually kind of predict what is going to happen in the marketplace. So if you a little bit confused, that's okay, just rewind the video, watch it again couple of times, get the hang of it. Start drawing your lines of support and resistance, add your Fibonacci in and just enjoy trading.

Trading is fun. And I'll see you on the next video.

And if you like this video, please watch the rest of the video and.

Follow the steps before you go. If you'd like to Earn a little bit of bitcoin. I give away 0.005 of a Bitcoin every single Friday to a random subscriber. If you'd like to earn that, there's a couple of things that you need to do. You need to subscribe to my YouTube channel. And how you do that is you just mouse over the video that you're watching. And in the bottom right hand corner of the video is a YouTube icon. Click that icon now. So please pause the video, go and do that step. Now, once done, you can come back to this video and resume the video. Now, if you're not already logged into your Gmail account, then you'd need to log in your Gmail account. Now, below the video that you're watching on YouTube there is a subscribe button. So what you do is you click on that subscribe button and then next to the subscribe button is a bell icon. You can click on the bell icon. So please pause the video, go and do those steps. Now, once done, you can come back to this video and resume the video. The next thing that you do is you need to give a thumbs up.

And then in the comment section, which.

Is over here, you can leave a positive comment together with your Bitcoin wallet address. Now, you have to follow the steps exactly to be able to get that prize. So you need to subscribe, you need to hit the bell icon, you need to give a thumbs up, and you need to leave a positive comment with your bitcoin wallet address. Only then are you entered into the competition and are legible to win a prize if chosen. So if you want to win 0.005 of a bitcoin, I highly recommend that you follow those steps and then you'll be eligible to win that prize. So good luck and I hope you win that prize.

And if you do, remember to invest.

It in a passive income stream and I'll see you on the next video.