The Definitive Manual on the Use of Lines in Technical Analysis: An Institutional Approach

[Igor Pereira]

Throughout my career in financial markets, since my first days as a Junior member at WallStreet NYSE until the founding of ExpertFX School in 2017, I witnessed a recurring pattern that separates traders consistently profitable from others. This pattern lies not in a secret indicator or a complex algorithm, but in a deep and philosophical understanding of the fundamentals.

By Igor Pereira, Financial Market Analyst and Junior Member WallStreet NYSE, Founder of ExpertFX School

The most fundamental of these foundations is paradoxically the most misunderstood: the use of simple lines in a graph. When mentoring countless traders, I realized that the misinterpretation of how and, more importantly, Why we draw lines is the root of many frustrations and losses.

This is not just another article on how to draw a trend line. This is an in-depth study, a manual that condenses my operational philosophy. My goal here, like Igor Pereira, is to deconstruct the myths surrounding him and reconstruct his approach from scratch, transforming his analysis from reactive and amateur to diagnostic and professional.

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Chapter 1: The New Trader’s Conceptual Trap — Why the Market Ignores Your Lines

Every beginner trader, when faced with the apparent randomness of a graph, searches in order. In this longing, the first tool you adopt is the line. It traces trend lines, supports, resistances, channels. In his mind, each line becomes a magical barrier, a self-declared prophecy. He hopes, with an almost religious faith, that the price reaches its line and reverses, as if the market had an obligation to validate its design.

This is conceptual trap number one.

The market, in essence, is a global auction arena driven by liquidity, purchase and sale orders, fear and greed. He's an ocean of flow of orders. To believe that this colossal ocean will change its course because of a line drawn in software is, in my opinion, a dangerous naivety. The market is not aware of its lines.

The failure of this approach is not technical, but philosophical. The novice trader uses the line as a tool for forecast. He says: "I believe the price will reverse Here.". The professional trader, as we teach exhaustively at ExpertFX School, uses the line as a tool for diagnosis. He asks: "What price behavior in this region Are you telling me about the balance of forces?" The difference is abysmal.

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Chapter 2: Igor Pereira’s Philosophy — Lines as a Diagnostic Instrument

Here, I, Igor Pereira, ask you to radically change your perspective. Forget the forecast. Embrace the diagnosis. Think of yourself not as a seer, but as an expert doctor. The graph is your patient, and the lines are your stethoscope.

The stethoscope doesn't predict if the patient will have a heart attack tomorrow. It allows the doctor to diagnose the current condition of the heart by listening to patterns and rhythms. Similarly, a line in the chart does not tell us what the price will do in the future. It allows us to diagnose the "health" of the current trend, listening to the story that price action tells us.

The real and only function of a line, in my methodology, is to help us answer a single question: Who's in control of the market right now?

By drawing a line, we are simply creating a framework, a model to interpret collective market psychology. It is from this diagnosis that our entire operational plan will be built.

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Chapter 3: Decode Market Psychology Through Lines

If the lines are our stethoscope, what are we hearing? We are listening to the battle between buyers ("tours") and sellers ("bears"). Each type of line gives us a clear diagnosis of the outcome of this battle.

• The Diagnosis of a High Trend Line (LTA) or High Channel: In my view, an ATL is not just geometry; it is the signature of a collective optimism. She tells us that the Buyers are firmly in control. The psychology behind this is that, with every attempt by sellers to push the price down (the pullbacks), buyers enter with more force, at higher and higher price levels. They show confidence and absorb all sales pressure. The path of least resistance, the stream of the river, flows upwards.

• The Diagnosis of a Lower Channel: This is the portrait of pessimism. The Salesmen are in charge. At each attempt by buyers to start a recovery, sellers respond aggressively by pushing the price to new minimums. The perception of value is decreasing. Any force is seen as an opportunity to sell at better prices. The current here flows down.

• The Diagnosis of a Horizontal Range: This is the diagnosis of a strength balance, an impasse. Neither buyers nor sellers can gain a decisive advantage. Buyers defend their territory (support) and sellers defend theirs (resistance). In my experience, these are periods of accumulation (large players buying discreetly) or distribution (large players selling).

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Chapter 4: The Golden Rule — Where and, Most Important, When to Operate

Now that we have our diagnosis, the strategy becomes logical. Like Igor Pereira, I defend a fundamental principle: Always operate in favor of the dominant force. Swim for the current. If our diagnosis points to the control of buyers (high trend), our operations must primarily be purchase.

The question becomes: Where is the best location to join this current?

The answer is to us extremes. In a high channel, the point of greatest tactical advantage, where the risk is lower and the potential for return is higher, is close to the base of the channel. It's the moment of "promotion" within a high trend.

But — and I repeat this rule tirelessly at ExpertFX School — the fact that the price touches the line IT'S NOT A BUY SIGN! This is the mistake we want to eliminate. The touch on the line only warns us that we have reached a "area of interest", a location where an opportunity may to emerge.

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Chapter 5: ExpertFX School Confirmation Method — Raising Analysis

The line gave us the location. Now we need the trigger, the confirmation. We need concrete evidence that the dominant force is, in fact, regaining control.

This three-step process is what I call "The ExpertFX School Confirmation Method". It is the watershed between amateur reaction and professional action.

1. Step 1: Identify Dynamics (The Diagnosis): Use your lines to diagnose the market feeling and identify the path of least resistance. (Ex: "The diagnosis is of a High Channel, buyers are in control.")

2. Step 2: Wait for Strategic Location (Patience): Wait passively for the price to reach an extreme favourable to your analysis. (Ex: "The price is approaching the base of the channel, a shopping area of interest.")

3. Step 3: Seek Confirmation Structure (The Action): This is the move that changes the game. In the area of interest, do nothing. Watch. What we want to see is the price to give us a clue. For a purchase, we want to see the price stop falling and start moving sideways, in a little consolidation. That's a accumulation structure. Think of it as a spring being compressed. It shows us that the sales pressure "dried" and that the buyers are absorbing the latest sales orders, preparing for the next high impulse. It's the development of this structure, and its disruption, which serves as our confirmed input signal.

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Conclusion: A New Mentality, by Igor Pereira

I hope this in-depth study has redefined its perception of such a basic tool. Lines aren't meant to predict. They're for diagnosis. They offer us a bias and point us to a location. Entry, however, should only occur after a clear confirmation that the dominant force is back in play.

By internalizing this philosophy — Diagnosis → Location → Confirmation — you will cease to be a trader who responds to hope and become an analyst who operates on evidence. This, I assure you, is the change of mind that can define your career in the financial market.