Upward Trendlines & Channels
An upwards trend-line is plotted below the trend pattern setup by connecting at least two lows. This upwards trend-line will draw a line that show the general direction of the market.
The diagram below shows how gold trading price moves when it is moving in a bullish market. The gold price will move up-ward forming support regions.
Since the market moves in a zig-zag manner traders normally draw a trend line which shows the general upward direction of the market.
A up trend occurs when the fore gold price will continue to make consecutive higher highs & higher lows. Each price high is higher than the previous high - higher high, and each low is higher than the previous low - higher low.
XAUUSD Up trend-lines gain more validity every time gold trading price touches this upward trend line but does't penetrate it. A up trend remains in place til this series of higher highs and higher lows is broken.
A downside penetration of an up-ward trend-line is a technical sell signal, and usually the first indication that an upward trend might soon end.
Upward Trendline MetaTrader 4 Trend Line Indicator
When the market moves up it forms higher highs and higher lows forming a bullish market movement - Upwards Trend. An upward trend-line can then be drawn by connecting these higher lows.
To draw this up-ward trend line setup we use supports. To draw the up-ward trend-line correctly two support areas are needed. When trading price touches the up-ward trend line we buy and place stop loss orders just a few pips below the upward trend-line. Diagram below shows an example of an upwards trend line.
The upward trend line setup will show the general direction of the market as bullish therefore traders only will open buy long trades as long as trading price is within this upward trend bullish market setup and within the support levels. These support levels are the levels where if the market retraces then these points will provide strong supports for the trading price. This is why many buyers will wait til trading price retraces downwards and hits these retracements levels market the upward trend line to open buy trades. Trade transactions opened at this support levels have a high Risk to Reward Ratio with minimum draw down.
In the above up-ward trend line xauusd setup the trader would have opened buy/long trades from the signals generated at the support1, support2, support3 and these gold trades would have made a lot of trading profits with minimum amount of draw-down/retracement.
Upward Channel
An upwards channel is plotted by drawing a line that's parallel to the upward trend-line & then adjusted to touch the tops boundary of the price movement. This then forms an up-ward xauusd channel and as long as a price stays between these 2 channels the bullish market movement will continue heading upwards.
How Do I Trade Upwards Channel
This upwards channel is used by traders to show levels where it's best to take profits. Traders will book some profit once the trading price touches upper channel & wait for another retracement before opening a long buy gold trade again.
MetaTrader 4 Tools for Drawing Trendlines and Channels
The MetaTrader 4 Trendline Indicator drawing tools to draw these trend lines & channels setups on the MT4 are located on the MetaTrader 4 drawing tool-bar within the MetaTrader 4 platform, To get this MT4 tool bar if it is not activated on your platform, Click in 'View' Next to the 'File' menu at top left corner of MetaTrader 4 software and click View, Then Click on ToolBars, Then Check the 'Lines Tool-Bar' by clicking on it.
Below is the image Image of the MetaTrader 4 drawing toolbar. To draw a trend-line on a chart click on this MetaTrader 4 trend line drawing tool & select the point where you want to plot the trend line.
This is one of learn technical analysis lesson among the many learn tutorials on this website located on the side navigation menu, where you'll learn how to draw trend-lines and analyze these trend lines setups.
