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Chapter 8, Part II. Trend Lines

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, May 15, 2011.

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  1. Administrator

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    Part II. Trend Lines [​IMG]
    Commander in Pips: Today we will talk about trend lines.

    Pipruit: This is something like trends in haute couture?​

    Commander in Pips: Almost, but not quite. A trend line is a very useful and simple tool, but due to misleading application this nice tool is underrated by traders. Trend lines could be quite accurate and provide great assistance in trading.

    In fact trend lines are look similar to support and resistance lines, but usually used during directional move of the market – up or down. Other words speaking – trend lines have some slope, although there are horizontal trend lines that exist also. It is simpler to understand, when you will see it.
    There are three major types of trend lines:

    1. Upward trend line - uptrend;

    2. Downward trend line - downtrend;

    3. Horizontal trend line – Sideways trend.

    [​IMG]
    As an example, here is the monthly chart (1 bar stands for 1 month) of AUD/USD. Here you can see uptrend lines (green) and downtrend lines (red)

    [​IMG]



    UPTREND

    An uptrend line suggests appearing of higher lows from price movement – take a look at any upward trend line (green), the second low and others lows are always higher, than the previous one. It always draws and stands below the price action. This line is some kind of support line that we’ve talked about in previous chapter, but with an upward slope. To draw an uptrend line you need to link well-recognizable lows or support areas. Just find two major bottoms and connect them with line. So, you’ve got your upward trend line!

    DOWNTREND

    A downtrend line suggests the appearing of lower highs from price movement – take a look at any downward trend line, the second high always lower, than the first one. It always draws and stands above the price action. This line is some kind of resistance line that we’ve talked about in previous chapter, but with downward slope. To draw a downtrend line you need to link well-recognizable highs or resistance areas. Just find two major tops and connect them with line. So, you’ve got your downward trend line!
     
    #1 Administrator, May 15, 2011
    Lasted edited by : Feb 12, 2016
    Hamza Samiullah and fran alvarez like this.
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