How Do You Draw a Forex Trendline on a Chart?

How Do You Draw a Forex Trendline on a Forex Chart?

Guide on How Do You Draw a Forex Trendline on a Chart - How Do You Draw Forex Trend Lines on Charts

Principles of How Do You Draw a Forex Trendline on a Chart?

1. Use candlestick charts to draw trend lines

2. The areas used to draw a trendline on a chart are along the lows of price bars in a bullish market. An upward bullish trend is defined by higher highs and higher lows.
3. The points used to draw a trendline on a chart are along the highs of price bars in a bearish market. A downward bearish trend is defined by lower highs and lower lows.
4. The points used to draw trend-lines on the charts are the extremes areas - the high or the low price. These price extremes are critical because a close beyond the extreme chart points tells traders the trend of forex instrument might be changing. This is an entry or an exit signal.
5. The more often a trendline on a chart is hit but it is not broken, the more powerful its trend signal.

Example 1: How Do You Draw a Upward Trendline on a Chart?

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

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

Draw a Upward Trendline on a Chart in Forex Trading

How Do You Draw an Upward Trendline on a Chart

Example 2: How Do You Draw a Downward Trendline on a Chart?

To draw a downwards trendline on a chart use 2 resistance points in a bearish downwards trend so as to plot the downwards trend-line and then extend the trend-line as illustrated below. Downwards trendline on a chart will illustrate the general direction of prices & as long as price is below this downwards trend-line then the downwards trend will remain intact - bearish downwards trend.

If prices move above the downwards trendline which is the resistance level for the bearish downwards trend then traders should close out all their open trades - because this may be a trend reversal. In an downwards trend price should generally stay below the resistance area which is marked by the downwards trend-line on a chart.

Draw a Downward Trendline on a Chart in Forex Trading

How Do You Draw a Downwards Trendline on a Chart

How Do You Draw a Forex Trendline on a Chart?