How to Draw Commodities Trend Lines and Channels on Commodities Trading Charts

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

A trendline depicts the points of support & resistance for the trading price, depending on the direction of the market. For an upward moving market trend - trend line will shows the points of support and for a downward moving market trend - trend line will show the areas of resistance - trendlines are mainly used by many traders to determine these resistance and support levels on charts.

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

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

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

If trend lines forms in a certain direction then the commodity market usually moves in that direction for a period of time until a time when this trendline is broken.

Drawing these commodity trendlines on a commodity chart displays the general commodity trend of the commodity market which can either be upwards or down-wards.

Below is example of how to draw these commodity trend lines on charts

Guide:How to Draw Upwards Commodities Trend Line & Trade Upwards Commodities Trend Move

Course Tutorial: How to Draw Downward Commodities Trendline and Trade Downward Commodities Trend Move

The Meta Trader 4 trading software provides charting tools for drawing these commodity trend lines on charts. To draw commodity trendlines onto a commodity chart, traders can use the commodity tools provided on the MT4 software that is shown below.

To draw commodity trendlines on a commodity chart just click the Commodity MT4 Draw Commodities Trend Line Tools as shown above on the MT4 platform technical analysis software and select point A where you want to start drawing the commodity trend line & then point B where you want the commodity trendline to touch. You can also rightclick on commodity trendline and on the properties option select the option to extend its ray by ticking "ray check box", if you do not want to extend the commodity trendline, then uncheck this option in your MT4 trading platform. You can also change other trendline properties such as color & width on this property popup window of the commodity trendline properties. You can download MetaTrader 4 software and learn commodity trendline 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 strategy to trade Commodity because once trading prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this trend trading technique presents opportunity to make profits from the trading market.

Principles of How to Draw Trendlines

1. Use candlestick charts

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

There are two main ways of trading this trend line technical analysis setup:

1. The Commodities Trend-Line Bounce - Trend Line Bounce
2. The Commodities Trend-Line Break - Trend Line Break

Analysis Methods of Trend Lines

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

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

For very strong trends, after this trendline break signal, the trading price will consolidate for some time before heading in the opposite market direction. For short term trends then this trendline break signal will mean trading price might reverse direction immediately.

In commodity, both the commodity trend line bounce and the commodity trendline break that are used in technical analysis charts are based upon these commodity trend line levels being support & resistance areas.

Entry, Exit & Setting stops:

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

The commodity trendline break is a crucial technical indicator of possible commodity trend reversal. When the commodity trendline is broken the trading price starts move in the opposite market direction. This provides an early exit signal for traders to exit their open trades and take profits. When there a penetration of these commodity trend line levels, it's a signal that the trading price can begin moving in the opposite market direction.

Unlike other technical analysis indicators there is no formula used to calculate the commodity trend line, this trend line formation is just plotted between two chart points on the chart.