MetaTrader 4 Tools for Drawing Stock Indices Trend Lines and Stock Indices Trading Channels
Downward Stock Indices Trend Line MetaTrader 4 Stock Indices Trend Line Indicator
A downward stock indices trend line is drawn above the stock indices downward trend pattern formed by consecutive lower highs, the downward stock indices trend line must connect at least two highs, with the most recent high being lower. For our stock indices downward trend examples we shall use the MetaTrader 4 technical analysis software stock indices charts to illustrate an example of downward stock index trend.
Since stock index price moves down in a zigzag manner stock indices traders normally draw a downward stock indices trend line which shows the general downward direction of the stock indices prices. In stock index trading market technical analysis, this general stock index price direction is referred to as the TREND by stock index traders. In stock indices technical analysis definition we can define this stock indices down trend line is drawn on a Stock Indices Trading chart showing the resistance levels (bearish market direction).
A stock indices down trend occurs when the stock index price makes a series of lower highs and lower lows. Each high is lower than the previous high - lower high, and each low is lower than the previous low - lower low therefore showing bearish stock index price movement.
Stock Indices Trading Down stock index trend lines gain more validity each time stock index price touches the downward stock indices trend line but does not penetrate the stock indices trend line. A stock indices down trend remains the general direction until this series of lower highs and lower lows is broken.
In stock indices technical analysis, An upside penetration of a stock indices down trend line is a technical buy stock indices signal, and usually the first indication that the bearish direction of stock indices prices may soon reverse.
Downward Stock Indices Trend Line MetaTrader 4 Stock Indices Trend Lines Indicator
When it comes to learning how to draw and learning stock indices technical analysis of stock indices charts, you need to know that when the stock indices market is bearish it forms lower lows and lower highs forming a downward general market direction. These are the points that are used to draw the downward stock indices trend line.
To draw this stock indices downward trend setup we use resistances and to do it correctly two resistances are needed. When stock index price touches this stock indices trend line, then we sell and place stop loss just a few pips above the sloping resistances;
How to Trade Downward Stock Indices Trading Trend Line
When trading with this stock indices trend line trading method, this stock indices trend line setup will show the general direction of the stock indices market as downwards therefore stock indices traders will only open short sell stock index trades. These are the levels where if stock index price retraces then these points will provide strong resistance. This is why many short sellers will wait until stock index price retraces upwards and hits these retracements levels to open sell stock index trades. Indices trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.
For Example, in the above stock indices example, a stock indices trader would have opened short sell stock indices signals at the resistance1, resistance2, resistance3 and these sell stock index trades would have made a lot of profits with minimum amount of draw-down/retracement.
Downward Stock Indices Trading Channel MetaTrader 4 Channel Indicator
A stock indices downward channel is drawn by drawing a line that is parallel to the downward stock indices trend line and then adjusting it to touch the bottom boundary of the stock index price movement. This then forms a downward stock indices channel and as long as the stock index price stays between these two channels the general stock indices market direction is intact the stock indices market direction will continue being bearish.
Trading The Downward Stock Indices Trading Channel
The downward stock indices channel is used by stock index traders to show levels where it is best to take profits. Stock Indices traders will take some profit once the stock index price touches the lower channel and wait for another retracement before opening a short sell stock indices trade again.
Downward Stock Indices Trading Channels MetaTrader 4 Channels Indicator
The stock indices tools to draw these stock indices channels studies on the MetaTrader 4 stock index charts are located on the Lines Toolbar within the MetaTrader 4 stock index platform, to access this MT4 tool bar if it is not activated on your MetaTrader 4 Stock Indices Platform, Click in "View" Next to "File" at the top left corner of the MetaTrader 4 Stock Indices Platform and click View, Then Click on Tool bars, Then Check the Lines Toolbar by clicking on it.
Below is the screenshot of these MetaTrader 4 tools: just click on this MT4 channels drawing tool and select the point to where you want to place this stock indices channels tool on the stock index chart.
MetaTrader 4 Technical Analysis Charts - Downward Stock Indices Trading Channels
MetaTrader 4 Toolbar - MetaTrader 4 Tools for Drawing Stock Indices Trend Lines and Stock Indices Trading Channels used to obtain these stock indices trend line drawing tools is shown above, to draw these stock indices trend line setups or stock indices channels, just select the above MetaTrader 4 stock indices trend line drawing tools shown on the MetaTrader 4 stock indices software and select the two points where you want to draw the stock indices downward trend line.
This stock indices trend line stock indices strategy is one of the simplest and popular stock indices technical indicators used by stock index traders to analyze the stock indices market stock indices trend direction.