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MEGA-THREAD on TREND LINES.
I will share the most comprehensive and exhaustive guide to trend lines in this thread.
I've included read world examples for clear understanding.
This is everything you need.
Please retweet if you find it helpful, it might help someone.
I will share the most comprehensive and exhaustive guide to trend lines in this thread.
I've included read world examples for clear understanding.
This is everything you need.
Please retweet if you find it helpful, it might help someone.
I will explain the following.
1. What is a Trend line.
2. Types of Trend lines.
3. How to use a Trend line.
4. Miscellaneous uses of Trend line.
5. When does it break.
6. High probability trade with Trend line.
1. What is a Trend line.
2. Types of Trend lines.
3. How to use a Trend line.
4. Miscellaneous uses of Trend line.
5. When does it break.
6. High probability trade with Trend line.
Basics.
Trend lines are drawn by connecting the high/low points. (I use wicks, some traders only use the body)
The longer the Trend line, the stronger it is.
Use the same time frame to draw the Trend line that's been used for trading.
Trend lines are drawn by connecting the high/low points. (I use wicks, some traders only use the body)
The longer the Trend line, the stronger it is.
Use the same time frame to draw the Trend line that's been used for trading.
What makes a trend line?
It's formed by joined two successive higher highs or lower lows. This is called a tentative trend line.
However we need 3 points of touch and a bounce off the 3rd point for a confirmed trend line.
Some people use only the body, I use the wicks (mostly)
It's formed by joined two successive higher highs or lower lows. This is called a tentative trend line.
However we need 3 points of touch and a bounce off the 3rd point for a confirmed trend line.
Some people use only the body, I use the wicks (mostly)
Personal opinion- Most traders use Trend lines as support and resistant lines.
However, I use them as interest zones.
The zone where a rising/falling trend will continue it's trend or create a reversal.
This is an interest zone where we should decide to long/short.
However, I use them as interest zones.
The zone where a rising/falling trend will continue it's trend or create a reversal.
This is an interest zone where we should decide to long/short.
There are 4 types of trend lines according to my observation.
A. Uptrend resistance.
B. Uptrend support.
C. Downtrend resistance.
D. Downtrend support.
All have been explained in detail, below.
Note- If you're finding it difficult, don't worry, read it again with patience.
A. Uptrend resistance.
B. Uptrend support.
C. Downtrend resistance.
D. Downtrend support.
All have been explained in detail, below.
Note- If you're finding it difficult, don't worry, read it again with patience.
A. Uptrend resistance.
As the name suggests, it's formed in a clear uptrend. The graph should clearly form higher highs, joining of which gives an uptrend resistance Trend line.
It can be used to enter a short trade in an uptrend.
The prospective entries have been shown.
As the name suggests, it's formed in a clear uptrend. The graph should clearly form higher highs, joining of which gives an uptrend resistance Trend line.
It can be used to enter a short trade in an uptrend.
The prospective entries have been shown.
B. Uptrend support.
During an uptrend, there is a formation of successive higher lows. Joining of these higher lows gives an uptrend support trend line.
It can be used to enter a long trade in an up-trending market.
During an uptrend, there is a formation of successive higher lows. Joining of these higher lows gives an uptrend support trend line.
It can be used to enter a long trade in an up-trending market.
Important- Only after an Uptrend resistance Trendline and uptrend support Trend line have been confirmed and draw, we can declare the price action to be bullish.
C. Downtrend resistance-
This is formed in a downtrend, by joining the lower highs. Signifying the reduction in the peak price of the asset over time.
It can be used to enter a short in a down-trending market.
This is formed in a downtrend, by joining the lower highs. Signifying the reduction in the peak price of the asset over time.
It can be used to enter a short in a down-trending market.
D. Downtrend support- It is formed by joining the lower lows in a down trending marking. It signifies that the market is making continuous lower lows.
It can be used to enter a short term long in a bear market.
It can be used to enter a short term long in a bear market.
What happens when a Trend line breaks?
It starts behaving in the opposite nature.
Trend line is a 2 way sword.
A previous support Trend line becomes a resistance on being broken.
A previous resistance becomes support on being broken.
It starts behaving in the opposite nature.
Trend line is a 2 way sword.
A previous support Trend line becomes a resistance on being broken.
A previous resistance becomes support on being broken.
It has another important use of determining the change in trend.
Upon a breakout/breakdown, we can determine a change in the trend.
This is the best opportunity to enter a high probability trade.
Pay attention on the red box
THIS IS WHY I CALL TREND LINES AS INTEREST ZONES.
Upon a breakout/breakdown, we can determine a change in the trend.
This is the best opportunity to enter a high probability trade.
Pay attention on the red box
THIS IS WHY I CALL TREND LINES AS INTEREST ZONES.
On zooming into the red box, we find a breakout from the trend line, a clear re-test and a confirmed support being formed at the trend-line.
This is a high probability trade. And hence it's an interest zone.
This is a high probability trade. And hence it's an interest zone.
Which scale to use?
We need to zoom back and see what is the organic trend of the trend. Sometimes it follows log and sometimes it doesn't.
Below is an example of the the Nasdaq bank index. The trend lines behave differently on log and non log scale.
We need to zoom back and see what is the organic trend of the trend. Sometimes it follows log and sometimes it doesn't.
Below is an example of the the Nasdaq bank index. The trend lines behave differently on log and non log scale.
A clear trend and clear trend lines will give a clear support and resistance trends. Most swing trades are made in this range. This is known as a channel . This range is where most of the intra-day trades are done.
How I personally use the trend lines.
I Use Trend lines to determine a change in trend. Wait for the following
1.Breakout/Breakdown OR Wait for them to act as support or resistance.
2. Retest
3. Confirmation of Point 1
This leads to a high probability trade.
I Use Trend lines to determine a change in trend. Wait for the following
1.Breakout/Breakdown OR Wait for them to act as support or resistance.
2. Retest
3. Confirmation of Point 1
This leads to a high probability trade.
Once you have read this thread a few times, you will master trend lines. You don't need anything else.
I hope this has helped. It took me one whole day to write. Please share if found this useful.
I hope this has helped. It took me one whole day to write. Please share if found this useful.
