TREND LINES

What Is A Trend Line?

It is a line drawn along a trend to show support or resistance.

▪ A trend line can never be a horizontal line, it must be always be diagonal line.
▪ there are only two types of trend lines, a falling trend line (down trendline) and a
rising trend line(up trendline).

HOW TO DRAW TREND LINE?

Downtrend Line

-Find two swing highs (peaks), these are shown as point 1 and 2 on the chart below.

-Connect point 1 and point 2 with a line

UPTREND LINE

- Find two swing lows (bottoms), these are shown as point 1 and 2 on the chart
below.

- Connect point 1 and point 2 with a line.

Important points to remember: -
1. When u see 2 swing lows/swing highs clearly apart from each other , then it is
time for a trend line.
2. Time Frame : 4hr, Daily, weekly more reliable. 1hr is only for scalping or intraday
trading
3. Overlapping : Never draw a trendline cutting the body of candle. Sometimes u can
cut the wick if required.
4. Do not force a trend line to fit on your chart. If it doesn’t fit, don’t bother drawing
it.
5. When price hits the line for the third time, the line is valid trendline.
6. Always price has a tendency to retest the trendline after it breaks/intersect it.

What Happens If Trend Lines Get Intersected?

If a trend line gets intersected, it can mean 2 things:

1. the trend has now changed

2. it can be a false trendline breakout, the price will continue moving up in the
original trend
Example for trendline break out , retest and how trend is changed.

Here’s an example of a false trend line breakout and market continued trend.

Main Question : How to trade trendline??

There’s are two main ways to trade trend lines:

1. trade the bounce of the trend

2. trade the breakout of the trend line

HERE YOU NEED TO HAVE A STRATEGY !!