Do Trendlines work?

It just depends how you use them, I have developed several trendlines based methods for intraday trading, using very tight stops . They must be used in fractal mode. Much more work though and that is why almost nobody is doing it.

 

I am not an experienced trader and have just recently joined this site. However I did a research on trendline action on CME E-mini’s over 2-3-5 min charts.

All I can say about the result of my research is briefly as below, which I am sure the other guys have already mentioned most of it

Trendlines work BETTER when
1- are visible on more than 1 timeframe ( 2-3-5 )
2- you can confirm it with some other indicator such as MACD or RSI
3- you have a decent harmonic channel ( for example : all retracements are from the upper BB to 20 MA )

the interesting part to me ( on CME E-mini ) was even though some time breaking the trendline does not stay for a long time, but it still does make you some money

the bad thing is you can not automated in tradestation .

overall TRENDLINE IS A GOOD SIGN for reversal but needs a good skill, expertise and knowledge of market behavior and they are different depending what you trade.

 

You can always find some trendlines to explain what happened afterward, but you neevr know which trendlines you should use beforehand.

 

I do agree with kaihui
however for this reason I did research in real time and I did wait till the trend has been confirmed.

I must mention again that trend line by itself is not enough to enter the trade, I personaly like to confirm it with Volume, MACD , stochs and RSI.

 

Hi Maestro,

could you please post, a fairly brief description of the way you'd construct the pivot points you'd use to draw trendlines? Plus, how many bars after the pivot point would you need to confirm the existence of such an entity.

Would it be something like 2 higher highs (bars) after a bunch of lower lows constitutes, say, an intraday pivot point? (And vice versa). Hence in this case requiring at least 2 bars after the fact before confirming the pivot.

Thanks a lot.

 

I always know which trendline to use beforehand .

 

I use a very conventional definition of pivot points. Something like 3/3 meaning that I'm looking for the highest high of 3 bars before the point and 3 bars after the point. The same thing goes for low points. Below is an illustration of that.

 

Thanks Maestro.

 

I have found trendlines to be one of the most effective technical analysis tools.

 

I could not agree more. Good software does not hurt either