16# Mouteky Method Trading System

Trend line Trading System

Submit by JanusTrader

The first step to trend line construction, and most important, is the selection of the two points to create the trend line with. As I stated above, when pursuing to construct a trend line we must read like the Japanese, from right to left. All trend line analysis will be done on the four hour chart compression. By process of elimination of all chart compressions, I

have concluded that only the four hour compression is needed. The four hour compression generates less trend line breaks and more accurate price projections than any other time compression. All analysis shown of trend lines will be conducted of the four hour compression. In order to create a trend line, it is necessary to locate the two points to create the trend line. In this example we will be talking about a demand trend line (uptrend). An uptrend is created when demand exceeds supply; this is where the name demand line is derived from. When choosing the points to create a demand line we are focusing on points of support.

True points of support are only those which low has two candles to the left of it and two candles to the right of it which lows do not exceed the low you are using. See the examples below for reference of true support points.

In order to create a trend line, it is necessary to locate the two points to create the trend line. In this example we will be talking about a demand trend line (uptrend). An uptrend is created when demand exceeds supply; this is where the name demand line is derived from. When choosing the points to create a demand line we are focusing on points of support.True points of support are only those which low has two candles to the left of it and two candles to the right of it which lows do not exceed the low you are using. See the examples below for reference of true support points.

In the chart above, I have marked the two points that will be used to create the demand line, remember only two points are used to create our trend lines. Notice how I refer to the most recent point of support on the chart as the 1stst point, remember we trade the most dynamic market in the world, right to left is the key. To find the second point of the demand line we look for the very next point of support that has two candles to the left and two to the right that do not exceed the low of the support point.

In the pictures Moutekey Method forex system in action.

Once we have created of trend line, our next step is to use this trend line to create a downside price projection once the market opens a candle on the four hour chart below the demand line. Note I only say once the market opens a candle, mentioned nothing about close because only the open of a candle is necessary to create the price projection. The price projection is created this way; you take the highest high created above the demand line and mark it with a vertical line. As pictured in the example below:

Next you need to take a horizontal line and mark the point where the vertical line coming from the highest high recorded above the trend line intersect with the trend line. What seems complicated at first will be much easier observed and understood in the example below.Note

Note the two values listed on the chart. In the next step we take the difference between the highest high recorded above the demand line and the point where the demand line is intersected by the vertical line.

Highest High 1.9146

Point of intersection 1.8960

0.0186

We get a difference of 186 pips. This number becomes our price projection. The final step in the process is the point of application of the price projection. The price projection will be 186 pips to the downside oncea four hour candle has opened below the demand line. It is key to become accustomed to this technique because price usually reacts quickly to the downside once a candle has opened beneath the demand line. Valuable pips will be lost if the trader does not react quickly in many cases.