How Do You Draw Trend Lines Correctly on Charts?
How Do You Draw Trend Lines Correctly on Charts?
Guide on How Do You Draw Trend Lines Correctly - Detailed Guide on How Do You Draw Trend Lines Correctly
Principles of How Do You Draw Trend Lines Correctly?
Use candle charts
- The areas that are used to draw are along the lows of price bars in a bullish market. An upward bullish trend is defined by higher highs & higher lows.
- The points 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 signal.
- The more often a trend line is hit but not broken, the more powerful its trend signal.
Forex Example 1: How Do You Draw Upward Trend-Line Correctly?
To draw an upward trend line correctly use 2 support points in a bullish upwards trend so that to draw the upward trend-line & then extend the trend line as shown & illustrated below. The upward trend line will show the general direction of prices and as long as price is above this upward trend-line then the upwards trend will remain intact - bullish upward trend.
If prices move below the upward trend line which is the support zone for the bullish upward trend then traders should close all their open trades - because this might be a trend reversal signal. In an upwards trend price should generally stay above support level which is marked by the upwards trend line.
How Do I Draw Trend-Lines Correctly for Upward 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 illustrated below. Downwards trend line will show 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 trend line which is the resistance level for the bearish downward trend then traders should close all their open trades - because this might be a trend reversal signal. In an downwards trend price should generally stay below the resistance area which is marked by the downwards trend line.
How Do You Draw Trend Lines Correctly for Down-wards Trend
How Do I Draw Downwards Trend Line Correctly
How Do You Draw Trendlines Correctly on Charts?
