How to Draw Bitcoin Trend-Lines & Channels on Charts
Sometimes support and resistances are formed diagonally on a similar way like a stair-case. This forms a bitcoin trend which is a sustained movement in one direction either upwards or downward.
A bitcoin trend line depicts the points of support & resistance for the bitcoin trading price, depending on the direction of the price. For an upward moving cryptocurrency trading market trend - bitcoin trend line will shows the points of support and for a downward moving crypto market trend - trend-line will show the areas of resistance - btcusd trendlines are mainly used by many traders to figure out these resistance and support levels on bitcoin charts.
A Bitcoin Trend line is a slanting straight line that connects two or more bitcoin price points and extends into the future to act as a zone of support or resistance for the trading price movement. There are 2 different types of bitcoin trend lines: upward bitcoin crypto currency trend line and downward bitcoin trend line. Bitcoin trend-line is an aspect of trading analysis that uses line studies to try and predict where the next btcusd trading price move will head to. A trader must know how to draw and interpret signals generated by this bitcoin trend line tool.
The basis of this trading analysis is based upon the idea that markets move in trends. Bitcoin trend-lines are used to show and display 3 things.
- The general direction of the market price - up/down.
- The momentum of the current bitcoin trend - and
- Where future support and resistance will be likely located
If bitcoin trend lines forms in a certain direction then the btcusd trading market generally moves in that direction for a period of time until a time when this bitcoin trend line is broken.
Drawing these trend-lines on a chart displays the general bitcoin trend of the btcusd market which can either be upward or downward.
Shown Below is an example of how to draw these bitcoin trend lines on bitcoin charts
Tutorial: How to Draw Up-wards Bitcoin Trend Line & Trade Upwards Bitcoin Trend Move
Tutorial: How to Draw Downwards Bitcoin Trendline and Trade Downward Bitcoin Trend Move
The MT4 software provides charting tools for drawing these bitcoin trend lines on charts. To draw btcusd trendlines onto a chart, traders can use the bitcoin trading tools provided on the MetaTrader 4 platform software that is shown below.
To draw bitcoin btcusd trend lines on a chart just click the MetaTrader 4 Draw Bitcoin Trend Line Tools like as shown above on the MT4 software analysis software and select point A where you want to start drawing the btcusd crypto trend line and then point B where you want the btcusd crypto trend line to touch. You also can right click in the bitcoin trendline & on the properties option select the option to extend its ray by ticking "ray check box", if you don't want to extend the bitcoin cryptocurrency trend-line, then untick this option in your MT4. You also can change other bitcoin trend line properties such as colour & width on this property popup window of the bitcoin trend-line properties. You can download MetaTrader 4 software & learn bitcoin trend line technical analysis with it.
The btcusd crypto trend is your friend. Is a popular saying among investors because you as a bitcoin trader should never go against it. This is the most reliable strategy to trade Bitcoin because once bitcoin trading prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this bitcoin trend technique presents opportunity to make profits from the btcusd market.
Principles of How to Draw Bitcoin Trend Lines
Use bitcoin trading candle-stick charts
- The levels used to plot the bitcoin trend line are along the lows of the bitcoin trading price bars in a rising bitcoin market. An upward bullish bitcoin crypto trend move is defined by higher highs & higher lows.
- The points used to draw the bitcoin trend line are along the highs of the bitcoin price bars in a falling downwards market. A downwards bearish bitcoin trend move is defined by lower highs and lower lows.
- The points used to draw bitcoin trend lines are extreme points - the high or the low bitcoin trading price. These extreme are crucial because a close that extends the extreme alerts investors the bitcoin trend might be changing. This is an entry or an exit signal.
- The more times a bitcoin trendline is hit but it is not broken, the more powerful its signal.
There are 2 main ways of trading this bitcoin trend line technical analysis setup:
- The Bitcoin Trendline Bounce - Bitcoin Trend Line Bounce
- The Bitcoin Trendline Break - Bitcoin TrendLine Break
Technical Analysis Methods of BTCUSD Trend-Lines
The bitcoin crypto trend-line bounce is a continuation signal where bitcoin trading price bounces off this bitcoin trend line to continue moving in the same direction. In a downwards bitcoin cryptocurrency trend, the bitcoin market will bounce downward after hitting this trend-line level which is the resistance level. In an upward bitcoin cryptocurrency trend, the bitcoin trading market will bounce up-ward after hitting this bitcoin trend line level which is the support level.
The bitcoin trend-line break is a reversal crypto currency signal where the bitcoin trading market goes through the bitcoin trend line and starts moving in the opposite market trend direction. When a up btcusd trend is broken then the sentiment of the bitcoin trading market reverses & becomes bearish and when a down trend is broken then the bitcoin market sentiment reverses and becomes bullish.
For very strong btcusd crypto trends, after this bitcoin trend line break signal, the bitcoin trading price will consolidate for a while before moving in the opposite direction. For short term bitcoin trends then this bitcoin trend line break signal will mean bitcoin price may reverse direction immediately.
In bitcoin cryptocurrency trading, both the bitcoin trend line bounce & the bitcoin trendline break that are used in trading analysis charts are based upon these bitcoin trend line levels being support & resistance areas.
Entry, Exit and Setting stop losses:
This btcusd trend line method is used to figure out good entry & exit points, protective stop loss orders are placed just above or below these bitcoin trend lines. The bitcoin trend line bounce is a low-risk entry method used by traders to open and place entry trades after bitcoin trading price has retraced. Bitcoin trades are setup along these bitcoin trend line levels and a stoploss order placed just above/below these bitcoin trendlines.
The bitcoin trend line break is a crucial and important indicator of possible bitcoin trend reversal. When the bitcoin trend line is broken the bitcoin trading price begins to move in the opposite market direction. This provides an early exit signal for traders to exit their open trades and take profits. When there is a penetration of these bitcoin trend line levels, it is a signal that the bitcoin trading price can start moving in the opposite direction.
Unlike other trading analysis indicators there is no formula used to calculate the bitcoin trend line, this bitcoin trend line setup is just plotted between 2 chart points on the bitcoin chart.
Study More Tutorials:
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- Setting Up MT5 Bitcoin Trade Platform Software
- How Do I Download Bitcoin Trade MetaTrader 4 App Free?
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