If someone would told me to choose only one pattern and use it regardless of the currency pair, market condition or a timeframe I think the Trendline Rebound would be the one. In my opinion it’s the most common and realiable pattern which combined with support and resistance levels is one of the most powerful trading tools. The rules of this pattern are very simple and maybe this is the reason why it is so effective. You can see a perfect example below.
1. Price makes Lower Highs (red dots) which linked together create a trendline.
2. Price breaks through the trendline and makes a Higher High.
3. Price retreats to the trendline and after touching it (blue dot) continues to rise and creates new Highs.
As I mentioned earlier Trendline Rebound is a perfect tool to combine with support and resistance levels. It makes it easier to define potencial entry and stop loss levels, what you can see on some of the examples below.
© 2012 Forex Price Action
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