How to draw trend line?
There are two ponts to kept in mind in drawing trendlines:
1. It must touch at least 3 points
2. In a uptrend, draw the line along the lowest points in the trend without letting the line cross through prices.
In a downtrend , draw the line along the highest points in the trend without letting the line cross through prices.
It is not necessary that you will be able to draw a trendline in all timeframes in all market. If youy can draw them following above basic rules, then see how price responses to it.
Trendline drawn by joining by just 2 points are not much valid. More touches more valid it is.
1. It must touch at least 3 points
2. In a uptrend, draw the line along the lowest points in the trend without letting the line cross through prices.
In a downtrend , draw the line along the highest points in the trend without letting the line cross through prices.
It is not necessary that you will be able to draw a trendline in all timeframes in all market. If youy can draw them following above basic rules, then see how price responses to it.
Trendline drawn by joining by just 2 points are not much valid. More touches more valid it is.
Very good way to describe how to go about it as it is important to know how to draw trend lines. They can actually form the basis of analysis as you can see the price movements thanks to them.
Drawing a trend line helps identify market direction and potential support or resistance. Start by opening your chart and choosing a clear timeframe. In an uptrend, locate at least two significant higher lows and connect them with a straight line. For a downtrend, connect two or more lower highs. The line should touch price points naturally, without forcing it through candles. A valid trend line gains strength when the price respects it multiple times. Avoid drawing lines based on minor fluctuations or noise. If the price clearly breaks and closes beyond the line, the trend may be weakening or changing. Always redraw trend lines as new price data forms. Used correctly, trend lines offer simple but powerful insight into market structure and timing.
Aug 31, 2021 03:39