How to Draw Commodity Trading Trend Lines Correctly

How to Draw Commodity Trading Trend-Lines Correctly - Detailed Guide on How to Draw Commodity Trading Trend Lines Correctly

Principles of How to Draw Commodity Trading Trend Lines Correctly

1. Use commodity candle stick charts

2. The points used to plot are along the lows of the commodity price bars in a bullish commodity market. An upwards bullish commodity trend is defined by higher highs & higher lows.
3. The points used to plot are along the highs of the commodity price bars in a bearish commodity market. A downwards bearish commodity trend is defined by lower highs & lower lows.
4. The points used to draw commodity trend lines are extremes points - the high or the low commodity price. These extremes are important because a close beyond the extreme tells commodity traders the commodity trend might be changing. This is an entry or an exit commodity trade signal.
5. The more often a commodity trend-line is hit but not broken, the more powerful its commodity trend signal.

Example 1: How to Draw Upwards Commodity Trading Trend Line Correctly

To draw an upwards commodity trend line correctly use 2 support points in a bullish upward commodity trend so that to draw the upward trend-line and then extend the trend-line as illustrated and shown below. The upward commodity trendline will show the general direction of commodity prices and as long as price is above this upwards trend line then the upward trend will remain intact - bullish upwards commodities trend.

If commodity prices move below the upwards trend line which is the support level for the bullish upwards commodity trend then traders should close all their open commodities trades - because this might be a commodity trend reversal signal. In an upwards commodity trend commodity price should generally stay above the support area which is marked by the upward trend line.

How to Draw Commodity Trend Lines Correctly for Upwards Commodity Trading Trend

How to Draw Upward Commodity Trading Trend Line Correctly - How to Draw Commodity Trading Trend Lines Correctly

Example 2: How to Draw Downwards Commodity Trading Trend Line Correctly

To draw a downwards commodity trend line correctly use two resistance points in a bearish downward commodity trend so as to plot the downwards commodity trend line & then extend the trend line as illustrated below. The downwards commodity trendline will show the general direction of commodity prices & as long as price is below this downwards trend line then the downwards commodity trend will remain intact - bearish downwards commodities trend.

If commodity prices move above the downward commodity trend line which is the resistance level for the bearish downwards commodity trend then traders should close all their open commodities trades - because this might be a commodity trend reversal signal. In an downward commodity trend commodity price should generally stay below the resistance area which is marked by the downwards trend line.

How to Draw Commodity Trading Trendlines Correctly for Downwards Commodity Trading Trend

How to Draw Downward Commodity Trading Trend Line Correctly - How to Draw Commodity Trading Trend Lines Correctly