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Chapter 8, Part V. Lines summary. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Trend lines

    In fact trend lines are very similar to support and resistance lines, but usually used during directional moves of the market – up or down. In other words, trend lines usually have some slope; although there are horizontal trend lines exist also. The major difference between support and resistance line and trend line is as follows: to build support or resistance area you need just one point. For any trend line you need at least two points (three is better).

    There are three major types of trend lines:

    1. Upward trend line – uptrend
    Uptrend line suggests appearing of higher lows from price movement. It always draws and stands below the price action. This line is some kind of support line that we’ve talked about in the 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!

    2. Downward trend line – downtrend
    Downtrend line suggests appearing of lower highs from price movement. It always draws and stands above the price action. This line is some kind of resistance line that we’ve talked about in the previous chapter, but with a 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!

    3. Horizontal trend line – Sideways trend.
    This is a bit specific price action and word “Trend” itself is not very suitable for this purpose, because trend suggests some acceleration to upside or downside – as we said either higher lows (upside acceleration) or lower highs (downside acceleration), but particularly this feature absents in sideways move. Usually this kind of price action named as “Consolidation” or “Ranging”.
     
    Hamza Samiullah and fran alvarez like this.
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