Downwards Energies Trendlines & Channels

How to Draw Downwards Energies Trend Lines on Energies Trading Charts

A downwards trendline is plotted above the downward trend pattern formed by consecutive lower highs, the downward trend line must connect at least 2 highs, with the most recent high being lower. For our downward trend examples we shall use the MT4 technical analysis software charts to illustrate example of downward trend.

Since price moves down in a zigzag manner traders normally draw a down ward trendline which shows the general downward direction of the prices. In market technical analysis, this general price direction is referred to as the TREND by traders. In energies analysis definition we can define this down trend-line is drawn on a Energies Trading chart showing the resistance areas (bearish market direction).

A down trend occurs when price forms a series of lower highs and lower lows. Each price high is lower than the previous high - lower high, & each low is lower than previous low - lower low therefore showing bearish price movement.

Energies Trading Down energies trading trendlines gain more validity each time price touches the downward trend line but doesn't penetrate the trend line. A down trend remains the general direction until this series of lower highs and lower lows is broken.

In energies analysis, An up side penetration of a down trend line is a technical buy signal, and usually the first indication that the bearish direction of prices may soon reverse.

Drawing a Downwards Trend Line

When it comes to learning how to draw and learning energies analysis of charts, you need to know that when the market is bearish it forms lower lows and lower highs forming a downward general market direction. These are the points that are used to draw the downward trend line.

To draw this downward trend setup we use resistances and to do it correctly two resistances are needed. When price touches this trend line, then we sell and place stop loss just a few pips above the sloping resistances:

Trading This Downward Energies Trend Market Move

When trading with this trend line trading method, this trend line setup will show the general direction of the market as downwards therefore traders will only open short sell trades. These are the levels where if price retraces then these points will provide strong resistance. This is why many short sellers will wait until price retraces upwards and hits these retracements levels to open sell trades. trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.

For Example, in the above example, a trader would have opened short sell signals at the resistance1, resistance2, resistance3 and these sell trades would have made a lot of profits with minimum amount of drawdown/retracement.

How to Draw a Energy Trading Downward Channel

A downward channel is plotted by plotting a line that is parallel to the downward trend line & then adjusting it to touch the bottoms boundary of the price movement. This then forms a downward energies channel and as long as a price stays between these 2 channels the general market direction is intact the market direction will continue being bearish.

Trading The Downwards Energies Channel

The downward energies channel is used by traders to show levels where it's best to take profits. Traders will take some profit once the price touches the lower channel and wait for another retracement before opening a short sell energies trading again.

Meta Trader 4 Tools For Drawing Energies Channels

The energies tools to draw these energies channels studies on the MT4 charts can be found on the Lines Toolbar within the MT4 platform, to access this MetaTrader 4 toolbar if it is not activated on your MetaTrader 4 Trading Platform, Click in 'View' Next to 'File' at the tops left corner of the MetaTrader 4 Trading Software & click View, Then Click on Toolbars, Then Check the Lines Tool Bar by clicking on it.

Below is the screenshot of these MT4 tools: just click on this MT4 channels drawing tool and select the point to where you want to place this energies channels tool on the chart.

MT4 Analysis Charts - Downward Energies Trading Channels

MT4 Toolbar - MT4 Tools for Drawing Energies Trendlines & Energies Trading Channels used to obtain these trend line drawing tools is shown above, to draw these trend line setups or energies channels, just choose the above MetaTrader 4 trend line drawing tools shown on the MT4 software and select the two points where you want to draw the downward trend-line.

This trend line energies strategy is one of the simplest and popular technical indicators used by traders to analyze the market trend direction.