What Is A Horizontal Line | Importance And How To Use Them In Forex Trading?

Just like price action and trend line, the horizontal level is also considered to be quite crucial in Forex trading. That’s because you can easily understand what will happen next in the market by analyzing the combination of horizontal level and price change. This analysis will help you understand the actual trend, making it possible for you to predict where the stock market is about to go.

What Is The Horizontal Line?

A Horizontal Line shows the horizontal level in the chart. And, it can be used as a simple strategy that can help you make money with trading. Moreover, with the use of a horizontal level or line, you can easily decide whether you should exit a trade. That’s because the horizontal level in the chart can help you figure out where a change is going to take place in the trend.

Also, if you manage to analyze the horizontal level correctly, it becomes easy for you to determine the right timing. It is hence leading you to a profitable trading practice. In other words, you can make use of a horizontal level for making the right decisions on when to enter and when to exit a trade for the best and most profitable results.

Moreover, there is no doubt that the horizontal level is a base for many useful trading strategies. However, you cannot generally consider it as enough indicator to independently give you the conclusion. Instead, it is highly recommended to use it with other relevant indicators like trend line, etc. in combination.

Difference Between Horizontal Line and Trend Line

When it comes to making a clear differentiation between the horizontal line and the trend line, there are mainly two essential differences.

Angle

The most crucial difference between the horizontal and trend line is the angle difference. For example, the horizontal line doesn’t have any angle. Meanwhile, on the other hand, the trend line has an angle of fewer than 90 degrees.

Validity

As a Forex trader, you can place a horizontal line at any resistance level – especially if you consider that level to be important. However, on the other hand, there must be multiple valid touches that need to be considered in case of a trend line.

How To Use The Horizontal Line In Forex Trading?

When it comes to the use of the horizontal line in trading, you should use it in combination with the trend line. For even better results, you should combine the two lines with a price action bar as well. Moreover, with a combination of all these three indicators, you can quickly figure out the best price point for making entry or exit in a trade.

Further, as an investor, you know there are times when the stock price seems to get close to the support level. In such cases, it will be better to wait until it makes a bounce back from that level. Similarly, if the stock price gets close to its resistance level, you should do the same as you would do in the case mentioned above.

Do you already possess a stock or security and intend to sell it? In case you do, you can make use of the horizontal line in combination with the trend line as well as the price action bar. They can help you make the best decision about keeping or selling the stock. In other words, after drawing the horizontal line and trend line, you can pick the best price point to sell off your security by looking at the price action bars.

Moreover, if the security or stock that you possess is going up and is about to hit its resistance level, you should consider keeping it. Also, in case it makes a bounce back from that level, it will be better to sell it off. And that’s how you can make use of the horizontal line in Forex trading.

Bottom Line

Hopefully, now, after reading this article, you have a clear understanding of what a horizontal line is. Moreover, you should be able to tell what the difference between a horizontal line and a trend line is. Also, you should have understood how you could make use of the horizontal line in Forex trading.

As we mentioned earlier, by combining it with the trend line and the price action bars, you and other investors should be able to make better investment decisions. In other words, the better you are at using these indicators in the trading strategies you make, the better and more profitable results you will enjoy.