How Do You Draw Trend Lines Correctly on fx Charts?
How Do You Draw Trend Lines Correctly on Charts?
Course on How Do I Draw Trend Lines Correctly - Detailed Guide on How Do You Draw Trend Lines Correctly
Principles of How Do You Draw Trend Lines Correctly?
Use candlestick charts
- The areas which are used to draw are along the lows of the price bars in a bullish market. An upwards bullish trend is defined by higher highs & higher lows.
- The points and levels which are used to draw are along the highs of the price bars in a bearish market. A downward bearish trend is defined by lower highs and lower lows.
- The points used to draw trendlines are extremes points - the high or the low price. These extremes are critical because a price close beyond the extreme tells traders the trend of instrument might be changing. This is an entry or an exit trading signal.
- The more often a trendline is hit but not broken, the more powerful its market signal.
Forex Example 1: How Do You Draw Upward Trendline Correctly?
To draw an upwards trendline correctly use 2 support areas in a bullish upwards trend so that to draw the upward trend line and then extend the trend-line as shown and illustrated below. The upwards trendline will show the general direction of prices & as long as the price is above this upward trend-line then the upwards trend will remain intact - bullish upward trend.
If prices move below the upwards trendline which is the support zone for the bullish upward trend then traders should close all their open trade positions - because this might be a trend reversal signal. In an upward trend price should generally stay above support level which is marked & tagged by the upwards trend-line.
How Do I Draw Trend-Lines Correctly for Upwards Trend
How Do I Draw Upwards Trend Line Correctly
Forex Example 2: How Do You Draw Downwards Trend Line Correctly?
To draw a downwards trend line correctly use 2 resistance points in a bearish downward trend so as to plot the downwards trend line and then extend the trend-line as shown below. Downwards trend line will show the general direction of prices and as long as price is below this downward trend-line then the downwards trend will remain intact - bearish downwards trend.
If prices move above the downwards trend line which is the resistance zone for the bearish downward trend then traders should close all their open trade positions - because this might be a trend reversal signal. In an downward trend price should generally stay below the resistance area which is marked & tagged by the downwards trendline.
How Do You Draw Trend Lines Correctly for Down-wards Trend
How Do You Draw Downwards Trend Line Correctly
How Do You Draw Trendlines Correctly on Charts?
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