Add Commodities Trend Line on Commodities Trading Chart

Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a commodity trend which is a sustained movement in one direction either upward or downward.

A commodity trend line depicts the points of support & resistance for the commodities price, depending on the direction of the market. For an upward moving market it will shows the points of support and for a downward moving market it will show the areas of resistance and they are mainly used by many investors to determine these resistance and support levels.

Commodities Trend-line is a straight line that connects 2 or more commodities price points then extend into the future to act as areas of support or resistance. There are two different types: upward and downward. It is an aspect of commodities trading technical analysis that uses line studies to try and predict where the next move will head to. A trader must know how to draw & interpret signals generated by this tool.

The basis of this analysis is based upon the idea that markets move in trends. They are used to show 3 things.

• The general direction - up or down.
• The strength of the current move - and
• Where future support & resistance will be likely located

If lines forms in a certain direction then market usually moves in that direction for a period of time until a time when it is broken.

Plotting these on a commodity chart shows the general commodity trend of the commodity market which can either be upwards or downward.

Below is an example of how to plot these on charts

Guide:How to Draw and Trade Upward Move

Course: How to Draw & Trade Downwards Move

The MetaTrader 4 software provides charting tools for drawing these on commodities charts. To draw them onto a commodity chart, investors can use the tool provided on the MT4 software that is shown below.

To draw on this on a commodity chart just click the drawing tool above on the MT4 technical analysis software and select point A where you want to start drawing and then point B where you want the it to touch. You can also right click in trend-line and on properties option choose the option to extend ray by checking "ray check box", if you don't want to extend it, then uncheck this option in your commodities trading platform. You can also change other properties such as color & width on this property pop up panel of the properties. You can download MetaTrader 4 software & learn technical analysis with it.

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

Principles of How to Draw

1. Use candlestick commodities charts

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

There are 2 main ways of trading this commodity setup:

1. The Bounce
2. The Break

Technical Analysis Methods

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

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

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

In commodity technical analysis, both the bounce and the breaks that are used in technical analysis charts are based upon these levels being support and resistance.

Entry, Exit and Setting stops:

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

The commodity trendline break is a crucial technical indicator of possible Commodity Trading reversal. When a the its broken the commodities price starts move in the opposite direction. This provides an early exit signal for investors to exit their open trades and take profits. When there a penetration of these levels, it is a signal that the commodities price can start moving in the opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate it, this pattern is just plotted between 2 chart points.