How to Draw Energies Trend Lines & Channels on Trading Charts

Sometimes support and resistances are formed diagonally in a similar way like a stair-case. This forms a energies trend which is a sustained movement in one direction either upwards or downward.

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

A Energies 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 price movement. There are 2 different types of energies trend lines: upward energies trend line and downward energies trend line. Energies trend line is an aspect of energies analysis that uses energies line studies to try and predict where the next energies price move will head to. A trader must know how to draw & interpret signals generated by this trend line tool.

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

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

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

Drawing these trendlines on a energies chart highlights the general energies trend of the market which can either be upward or downward.

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

Guide:How to Draw Up-ward Trend Line and Trade Upward Trend Move

Guide: How to Draw Downwards Energies Trend Line and Trade Downwards Energies Trend Move

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

To draw energies trendlines on a energies chart just click the Energies MT4 Draw Energies Trend Line Tools as shown above on the MT4 platform technical analysis software and select point A where you want to start plotting the trend line & then point B where you want the trend line to touch. You can also right-click on trend line & on properties option select option to extend the ray by ticking 'ray check box', if you don't want to extend the trendline, then untick/uncheck this option in your MetaTrader 4 software. You can also change other energies trend line properties such as color and width on this property pop-up window of the trend line properties. You can download MT4 software and learn trend line analysis with it.

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

Principles of How to Draw Trend Lines

1. Use trading candle charts

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

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

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

Analysis Methods of Energy Trend Lines

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

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

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

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

Entry, Exit & Setting stops:

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

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

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