Student’s Question: How is this for an example of using a trendline in trading?
Power Course Instructor’s Response: You definitely have the right idea here...buy on a pullback to the trendline. Should a candle close below the trendline, it could indicate a change of direction...well done. However, the fact that the trendline has already been compromised (see the chart below) invalidates it. We cannot not trust it as a level of support since it has previously broken down. We need to see two points which can be connected and the third instance in which that line is respected is the point at which we would take the trade with a stop below the trendline.