How to Draw BTCUSD Trend-lines & Bitcoin Channels on Bitcoin Charts

Sometimes support & resistance levels are formed diagonally in a similar way like a stair-case. This forms a price trend which is a sustained movement in one direction either upwards or downward.

This trend can be depicted by a trend line.

A trend line depicts points of support & resistance for the BTC/USD Crypto price, depending on the market direction of the market prices. For an upward moving market a trend-line will show the points of support & for a downwards market the trendline will show levels of resistance. Trend lines are mainly used by investors to figure out these points of support & resistance.

A Trend Line is a straight line that connects 2 or more price points & then extends into the future to act as a level of support or resistance.

There are 2 types of trend lines: upward trend line and downward trend-line. Trend line is an aspect of analysis that uses line studies to try and predict where the next market move is likely to head and move to.

One wanting to trade Bitcoin bitcoin trading online using trading analysis must know how to draw and interpret the trade signals generated by this trend-line trading tool.

Trend line analysis is based upon the idea that the market prices of Bitcoin move in trends. The trend lines show 3 things about current trend, these are:

The over-all direction of the market - whether up or down
The momentum of the current move
Where future support & resistance points will likely be located

If a trend line forms in a particular direction, then the market mostly moves in that particular direction for quite some time until the time when this trend is broken. When the trend is broken the trendline will also be broken - meaning price will move below an up trend line or above a downwards trend line.

Plotting trend lines on Bitcoin charts shows the general trend of the Bitcoin prices - which can either be upward or downward.

The example laid-out below sHow to draw trend lines:

Upward Trend Line

How to Draw Upwards Bitcoin Trend Line on Bitcoin Chart - Upward Bitcoin Trendline

Upward Trend-Line - Upward Trend of Bitcoin Prices

Downwards Trend line

How to a Bitcoin Draw Trend Line on Bitcoin Chart on MetaTrader 5 Explained - How to Draw Trendlines & Channels on BTCUSD Charts

Downwards Trend Line - Downwards Trend of Bitcoin Prices

Drawing Trend Lines on Bitcoin Charts Using MT5 Software

The MT5 software provides technical charting tools for drawing these trendlines on the BTCUSD trading charts. Traders can use the drawing tools provided on the MT5 software as illustrated below to draw these trend-lines.

How to Draw Bitcoin Trend Line on Bitcoin Charts in MetaTrader 5 Platform Software - How Do I Draw Trendlines and Channels on BTCUSD Charts?

MT5 Platform Trend Line Drawing Tool

To plot trendlines on a Bitcoin trading chart just click the line drawing tool shown above on the MT5 analysis software and choose point A where you want to start drawing the trendline and then point B where you want the trendline to touch. You also can right click on the trendline & after right clicking on it, on "properties" option choose the option to extend its ray by ticking "ray check box", if you do not want to extend it, then uncheck this option in your MT5 platform software. You also can change other properties such as colour and width of the trendline on this property settings pop-up window.

"The trend is your friend". Is a popular saying among investors because you should never go against the market trend. The trend is the most reliable method to trade Bitcoin prices because once the prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this technique gives you with the best chance to make profits from the online Bitcoin crypto market.

Principles of How to Draw Trendlines

Use candlestick charts to draw trend-lines
The points used to draw the trend lines are along the lows of the price bars in an upwards trend market. An upwards bullish moving trend is defined by higher highs & higher lows.
The points used to draw are along the highs of the price bars in a downward trend market. A downward bullish move is defined by lower highs & lower lows.
The points used to plot trend-lines are extremes points - the high or the low price. These extreme points are important because a close beyond the extreme tells investors & traders that the trend of the BTCUSD BTC/USD Crypto prices might be changing. This is interpreted as an entry or an exit trading signal.
The more often a trend line is hit but it is not broken, the more powerful its signal is.

There are 2 main ways of trading this set-up:

The Trend Line Bounce
The Trend Line Break

Analysis of These Two Methods

The trend-line bounce is a continuation signal where the price bounces off this trend-line & continues moving on the same direction as the trend line.

In an upwards trend move, the market will bounce up after hitting this technical level which is the support zone.

In a downwards trend move, the market will bounce downwards after hitting this technical level which is the resistance level.

The trend-line break is a reversal signal where the market goes through the trendline and starts moving in the opposite market trend direction.

When an uptrend is broken then the sentiment of the market reverses & becomes bearishWhen a down-trend is broken then the sentiment of the market reverses and becomes bullish

For very strong trends, after this trend line break signal, the price will consolidate for some time before going in the opposite market trend direction. For short-term trends then this trend line break signal will mean price may reverse immediately.

In Bitcoin cryptocurrency trading, both the trendline bounce and the trendline break that are used in trading analysis charts are based upon these technical levels being support & resistance levels for the Bitcoin price.

Using Trendlines as Entry Signals, Exit Signals - and for Setting Stops:

This trend line trading method is used to figure out good entry and points to exit opening & closing Bitcoin trades, protective stops are placed just below or above these trend-lines. The trend-line bounce is a low-risk entry method used by investors & traders to open and place entry trade transactions after the price has retraced but the market price is still within the trend direction. Trades are setup along these trend line levels and a stoploss order placed just above/below the trend line.

The trend-line break is a crucial technical indicator of possible market trend direction reversal. When a trend line is broken the price starts to head in the opposite market direction. This provides an early exit signal for investors & traders to get out of their open trades and take profits. When there's a penetration of these trend line levels, it's a trade signal that the price may reverse begin moving in the opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate trend lines, this trend-line formation is just plotted between 2 chart points and a btc usd trader has to learn how to draw these trend lines on their Bitcoin crypto charts.

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