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How To Draw Stock Trading Trend Lines and Channels on Stock Trading Charts

Sometimes support and resistances are formed diagonally in a similar way like a staircase. This forms a stock trading trend which is a sustained movement in one direction either upwards or downwards.

 

A stock trading trend line depicts the points of support and resistance for the stock price, depending on the direction of the stock trading market. For an upward moving stock trading market stock trading trend - the stock trading trend line will shows the points of support and for a downward moving stock trading market stock trading trend - the stock trading trend line will show the areas of resistance - stock trading trend lines are mainly used by many stock traders to determine these resistance and support levels on stock trading charts.

 

A Stock Trend line is a slanting straight line that connects two or more stock price points and then extends into the future to act as a level of support or resistance. There are two types of stock trading trend lines: upward stock trading trend line and downward stock trading trend line. stock trading trend line is an aspect of Stock trading technical analysis that uses stock trading line studies to try and predict where the next stock price move will head to. A stock trader must know how to draw and interpret stock trading signals generated by this stock trading trend line tool.

 

The basis of this stock trading technical analysis is based upon the idea that stock trading markets move in trends. stock trading trend lines are used to show three things.

  • The general direction of the stock trading market - up or down.
  • The strength of the current stock trading trend - and
  • Where future support and resistance will be likely located

 

If stock trading trend lines forms in a certain direction then the stock trading market usually moves in that direction for a period of time until a time when this stock trading trend line is broken.

 

Drawing these stock trading trend lines on a stock trading chart shows the general stock trading trend of the stock trading market which can either be upward or downward.

 

Below is an example of how to draw these stock trading trend lines on stock trading charts

 

Tutorial: How to Draw Upward Stock Trend Line and Trade Upward Stock Trend Move

Upward Stock Trend Line Analysis in Stock Trading - MetaTrader 4 Draw Stock Trend Line Stock Tools - MetaTrader 4 Stock Trend Line Drawing Stock Tools

 

 

Tutorial: How to Draw Stock Downward Stock Trend Line and Trade Downward Stock Trend Move

Downward Stock Trend Line Analysis in Stock Trading - MetaTrader 4 Draw Stock Trend Line Stock Tools - MetaTrader 4 Stock Trend Line Drawing Stock Tools

 

 

The MetaTrader 4 stock trading software provides stock trading charting tools for drawing these stock trading trend lines on stock trading charts. To draw stock trading trend lines onto a stock trading chart, stock traders can use the stock trading tools provided on the MetaTrader 4 stock trading software that is shown below.

How to Draw Stock Trading Trend Lines Stock Trading - Stock MetaTrader 4 Draw Stock Trend Line Tools - Stock MetaTrader 4 Stock Trend Line Drawing Tools

 

To draw stock trading trend lines on a stock trading chart just click the Stock MetaTrader 4 Draw Stock Trend Line Tools as shown above on the MetaTrader 4 stock trading platform technical analysis software and select point A where you want to start drawing the stock trading trend line and then point B where you want the stock trading trend line to touch. You can also right click on the stock trading trend line and on the properties option select the option to extend its ray by ticking the "ray check box", if you do not want to extend the stock trading trend line, then uncheck this option in your MetaTrader 4 Stock trading platform. You can also change other stock trading trend line properties such as color and width on this property popup window of the stock trading trend line properties. You can download MetaTrader 4 software and learn stock trading trend line technical analysis with it.

 

The stock trading trend is your friend. Is a popular saying among investors because you should never go against it. This is the most reliable method to trade Stock because once stock trading prices start to move in one direction they can move in that particular direction for quite some time - therefore using this stock trading trend trading method presents opportunity to make profits from the Stock trading market.

 

Principles of How to Draw Stock Trading Trend Lines

  1. Use stock trading candlestick charts

  2. The points used to draw the stock trading trendline are along the lows of the stock price bars in a rising stock trading market. An upward bullish stock trading trend move is defined by higher highs and higher lows.
  3. The points used to draw the stock trading trend line are along the highs of the stock price bars in a falling market. A downward bearish stock trading trend move is defined by lower highs and lower lows.
  4. The points used to draw stock trading trend lines are extremes points - the high or the low stock price. These extremes are important because a close beyond the extreme tells investors the stock trading trend of the stock trading instrument might be changing. This is an entry or an exit signal.
  5. The more often a stock trading trend line is hit but not broken, the more powerful its signal.

 

There are two main ways of trading this stock trading trend line technical analysis setup:

  1. The Stock Trend Line Bounce - Stock Trend Line Bounce
  2. The Stock Trend Line Break - Stock Trend Line Break

 

Technical Analysis Methods of Stock Trading Trend Lines

The stock trading trend line bounce is a continuation stock trading signal where stock price bounces off this stock trading trend line to continue moving in the same direction. In a downward stock trading trend, the stock trading market will bounce downwards after hitting this stock trading trend line level which is the resistance level. In an upward stock trading trend, the stock trading market will bounce upwards after hitting this stock trading trend line level which is the support level.

 

The stock trading trend line break is a reversal stock trading signal where the stock trading market goes through the stock trading trend line and starts moving in the opposite direction. When a stock trading up stock trading trend is broken then the sentiment of the stock trading market reverses and becomes bearish and when a stock trading down stock trading trend is broken then the stock trading market sentiment reverses and becomes bullish.

 

For very strong stock trading trends, after this stock trading trend line break signal, the stock price will consolidate for some time before moving in the opposite direction. For short term stock trading trends then this stock trading trend line break stock trading signal will mean stock price may reverse immediately.

 

In stock trading, both the stock trading trend line bounce and the stock trading trend line break that are used in technical analysis charts are based upon these stock trading trend line levels being support and resistance levels.

 

Entry, Exit and Setting stops:

This stock trading trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these stock trading trend lines. The stock trading trend line bounce is a low-risk entry method used by stock traders to place entry trades after stock price has retraced. Stock trades are setup along these stock trading trend line levels and a stop loss placed just above or below these stock trading trend lines.

 

The stock trading trend line break is a crucial indicator of possible stock trading trend reversal. When the stock trading trend line is broken the stock price starts move in the opposite direction. This provides an early exit signal for stock traders to exit their open trades and take profits. When there a penetration of these stock trading trend line levels, it is a signal that the stock trading price can start moving in the opposite direction.

 

Unlike other stock trading technical analysis indicators there is no formula used to calculate the stock trading trend line, this stock trading trend line formation is just drawn between two chart points on the stock trading chart.

 

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