Profits from identifying and trading price reactions at diagonal trend boundaries
| Strategy Type | Trendline Identification / Diagonal Support and Resistance |
| Market Outlook | Profits from identifying and trading price reactions at diagonal trend boundaries |
| Risk Profile | Low to Moderate - trendlines provide clear entry and invalidation points |
| Reward Profile | Consistent returns from trend continuation trades (15-40%+) |
| Time Horizon | Short to medium-term (hours to weeks) |
| Iv Environment | N/A - pure price-based strategy |
| Breakeven | Depends on trendline accuracy and trade management |
| Primary Instruments | US stocks via CFDs, S&P 500 E-mini, NASDAQ 100 E-mini, Forex, Commodities |
| Mas Compliance | MAS regulated brokers required for CFD/futures trading |
| Trading Hours | Multiple sessions - US 9:30 PM - 4 AM SGT, Asia 8 AM - 4 PM SGT, Europe 3 PM - 11 PM SGT |
| Contract Size | E-mini S&P: USD50 per point; Forex: varies by pair |
| Settlement | Cash settled for CFDs and futures |
| Tax Treatment | No capital gains tax for individuals in Singapore |
| Margin Requirements | Standard CFD/futures margin |
| Cdp Account | Not required for CFD/futures |
| Singapore Relevance | Trendlines work across all markets and sessions - essential skill for identifying trend direction and trading pullbacks |
A trendline is a diagonal line connecting swing points. Uptrend lines connect rising lows (support). Downtrend lines connect falling highs (resistance).
Minimum 2 touches to draw a trendline. 3 touches confirms validity. More touches increase reliability but eventually all lines break.
Either method works if consistent. Wicks show exact extremes. Bodies show closes. Many traders use wicks but treat the line as a zone.
30-45 degrees is optimal and sustainable. Steeper angles (over 45) often break quickly. Very shallow angles indicate weak trends.
Wait for price to touch the trendline. Look for reversal pattern (pin bar, engulfing). Enter in trend direction with stop beyond the line.
Two parallel trendlines containing price. Draw main trendline first, then parallel at opposite extremes. Buy at lower, sell at upper boundary.
Wait for price to close beyond the trendline with volume. Enter on confirmed break or wait for retest of broken line. Stop beyond the line.
After trendline breaks, price often returns to test it. Broken support becomes resistance. Enter on rejection at the retest for better risk/reward.
Draw trendlines on higher TF first (daily/weekly). Use for direction. Drop to lower TF for entry timing. HTF lines take priority.
After break, project the channel width from break point. If channel was 50 pips wide, target 50 pips beyond the break.
Detect swing points with lookback confirmation. Calculate line equation through pairs of swings. Count touches within tolerance. Score by multiple factors.
Optimize on training period (2 years), test on subsequent out-of-sample (6 months), roll forward. Validates parameters work on unseen data.
Price briefly breaks beyond trendline to trigger stops, then reverses. Institutions grab liquidity. Wait for hunt to complete before entering.
Weight factors: touch count (max 5), angle (optimal=3, acceptable=1), recency of touches, confluence. Sum weighted scores. Trade high-scoring lines.
Update incrementally as new bars form. Swing confirmation needs delay (lookback). Monitor proximity to generate alerts. Update scores regularly.
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