FOREX THEORY
Momentum Tricks
Draw trend lines on the momentum
indicators themselves
This might sound a little
ridiculous since you would normally draw trend lines only on price action. But
this is a nifty lil’ trick that we wanna share with you. After all, it doesn’t
hurt to have another weapon in the holster right? You never know when you might
use it!
This trick can be particularly
useful especially when looking for reversals or breaks from a trend. When you
see that price is respecting a trend line, try drawing a similar trend line on
your indicator.
You may notice that the indicator
will also respect the trend line. If you see both price action and the momentum
indicator break their respective trend lines, it could signal a shift in power
from buyers to sellers (or vice versa) and that the trend could be changing. Oh
yeah! Break it down like a Michael Jackson video!
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