I trade forex by using trendlines. I can draw them alright, but I want to know what is a valid confirmation of a trendline break? Some guys say a closing candle after the break, some people say 2 closing candles. Must I use any other sort of indicators with it? What do you guys say about it?
When I used to trade trendline breakouts I was only interested in 1-2-3 pattern breakouts. That means that the price action comes up to the trendline, then retraces a bit as the opposing traders try to push price back, then it reverses and breaks out past the first assault on the TL. Hmmmm, that probably didn't make a lot of sense. Let's assume your trendline is drawn on a bullish trend.
1. Price action reaches the trrendline as the Bears rally.
2. The Bulls push back when it hits the trendline so the price backs off.
3. The Bears Push back again, and push the price lower than the price in step 1.
When I see this pattern, I place my order a few pips above or below the price in step 1. I place my stop loss at the opposite end of that same candle.
I hope this helps.