Upward Trendlines & Channels

An upward trend-line is plotted below the stocks trend pattern by connecting at least 2 lows. This upward trend line will draw a line that show the general direction of the market.

The diagram below shows how price moves when it is moving in a bullish market. The stocks price will move up-ward forming support zones.

Since the stocks market moves in a zigzag manner stocks traders normally draw a trend-line which highlights the general up-wards direction of the market.

A up trend occurs when the fore stocks price will continue to form consecutive higher highs and higher lows. Each price high being higher than the previous high - higher high, & each low is higher than the previous low - higher low.

Stocks Trading Up stock trading trend-lines gain more validity each time stocks price touches this upward trend line but does not penetrate it. A up trend remains in place until this sequence of higher highs and higher lows is broken.

A down-side penetration of an upwards trend-line is a technical sell trading signal, & usually the first indication that an upward trend may soon end.

Drawing an Up-ward Trend Line

When the stocks market moves up it forms higher highs and higher lows forming a bullish market movement - Upwards Trend. An upward trend-line can then be plotted by connecting these higher lows.

To draw this upward trendline setup we use supports. To draw the up-ward trendline correctly two support zones are needed. When price touches the up-ward trend line we buy and place stop loss orders just a few pips below the upward trend line. The diagram below shows an example of an upward trend line.

The stocks upwards trend-line setup will show the general direction of the market as bullish therefore stocks traders will only open buy long trades as long as price is within this upward trend bullish market setup and within the support areas. These support levels are the levels where if the stocks market retraces then these points will provide strong supports for the stocks price. This is why many buyers will wait until price retraces downwards & hits these retracements levels market the up-wards trend-line to open buy trades. trades opened at this support levels have a high Risk to Reward Ratio with minimum draw down.

In the above up-ward trend line stocks setup the trader would have opened buy/long trades from the signals generated at the support1, support2, support3 and these trades would have made a lot of profits with minimum amount of drawdown/retracement.

Upward Channel

An upward channel is drawn by plotting a line that is parallel to the upward trendline & then adjusted to touch the tops boundary of the stocks price movement. This then forms an upward channel and as long as the price stays between these two channels the bullish upward market movement will continue moving up.

Trading The Channel

This upward channel is used by traders to show levels where it's best to take profits. Traders will take some profit once the stocks price touches the upper channel & wait for another retracement before opening a long buy trade again.

MT4 Tools For Drawing Stocks Trend Lines and Channels

The Trading MT4 Trendline Indicator drawing tools to draw these trend lines and channels setups on the MT4 are located on the MT4 drawing tool bar within the MT4 platform, To get this MT4 tool bar if it is not activated on your stocks platform, Click in 'View' Next to 'File' menu at the top left corner of the MT4 platform & click View, Then Click on Toolbars, Then Check the 'Lines Tool Bar' by clicking on it.

Below is the image Image of the MT4 drawing toolbar. To draw a trendline on a chart click this Meta Trader 4 trend-line drawing tool and select the point where you want to draw the trend line.

This is one of the learn technical analysis lesson among the many learn tutorials on this website located on the side navigation menu, where you will learn how to draw trend lines and analyze these trend lines setups.