TREND TRADER

The trend trader (slide or hug trader) isn’t looking for reversals but wants to go along
with the crowd. When a pattern confirms trend continuation, this trader enters into the
trade. Many times, one hardly needs any indicators at all to recognize that a trend continuation
pattern is intact. This occurred in a classic way on February 27, when the USDJPY
pair proceeded to enter into a downtrend with increasing momentum (Figure 14.2). The chart reveals several shifts in the trend line, creating a fan of outer to inner trend. Trend
patterns such as this one are irresistible, and entering into the trend is a high probable
trade provided stops are placed above the trend lines.
The pattern shows crowd behavior, as there are very few corrective moves up. This
usually occurs when the price is sliding down the Bollinger band or hugging the band on
an upward move. The major technical tactic is using the trend line to confirm where the
trend reversal would occur. Also, determine if an oscillator is appropriately aligned in
the direction of the trend (see Figure 14.3).
Let’s look at how the trader would use renko blocks to determine whether to get
out after going into a slide trade. We see a very clear hugging-the-band situation in the
USDJPY 15-minute chart (Figure 14.4). Assume the trade was put on at 8:00 after seeing
the price stick right on the band. The question is: Should the trader get out? By using trend lines and renko blocks, the trader gets the answer. If the trader sees that the renko
blocks are staying in a selling sentiment (red), as we see in Figure 14.5 and also that the
price is below the trend line, it is a good idea to stay in for the ride and not get out on
small countermoves up.


By ABE COFNAS