Add Trend-Line on Chart

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

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

Gold Trendline is a straight line that connects 2 or more price points then extend into the future to act as areas of support or resistance. There are two various different types: upwards and downward. It is an aspect of 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 market analysis is based upon the idea that markets move in trends. They are used to show three things.

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

If trend-lines form in a certain direction then market usually moves in that particular direction for quite some time until a time when it's broken.

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

Shown Below is an example of how to draw these on charts

Guide: How to Draw & Trade Upward Move

XAUUSD Trading Trend Line - How Do I Draw Trend Line on Chart? - How Do I Analyze Trend Using Trend Line?

Guide: How to Draw and Trade Down-wards Move

Trend Line - How Do You Interpret a Downward Trading Trend Analysis in Trading?

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

Trendline - How Do You Draw Trendline on Chart? - How to Analyze Trend Using Trend Line

To draw on this on a trading 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 as a trader want the it to touch. You also can right click the trend line & on the properties option choose the option to extend its ray by ticking "ray check box", if you do not want to extend it, then untick this option in your platform. You also can change other properties such as color and width on this property pop up panel of the properties. You can download MetaTrader 4 software & learn analysis with it.

The trend is your best friend. Is a popular saying among investors because you should never go against it. This is the most reliable method to trade because once prices start 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 market.

Principles of How to Draw

Use candlestick charts
The points which are used to draw are along the lows of the price bars in a upwards market. An upwards bullish move is defined by higher highs & higher lows.
The points used to draw are along the highs of the price bars in a falling market. A downwards bullish move is defined by lower highs and lower lows.
The points used to draw are extremes points - the high or the low price. These extremes points are important because a close beyond the extreme tells investors the trend may be changing. This is an entry or an exit signal.
The more often a trend line is hit but not broken, the more powerful its signal.

There are two main ways of trading this setup:

Bounce
The Break

Analysis Methods

The bounce is a continuation signal where price bounces off this line to continue heading in the same direction. In a downward move, the market will bounce down ward after hitting this level which is the resistance zone. In an upwards move, the market will bounce upwards after hitting this level which is the support area.

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

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

In trading analysis, both the bounce and the breaks-out that are used in analysis charts are based upon these levels being support & resistance.

Entry, Exit and Setting stops:

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

The trend-line break is a crucial technical indicator of possible reversal. When a the its broken the price starts to move in the opposite price trend direction. This provides an early exit signal for investors to exit their open trades & take profits. When there a penetration of these levels, it is a signal that the price can begin heading in opposite market direction.

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

Study More Tutorials and Topics:

Trade Gold Trading

Add Trend-Line on Chart

Principles of How to Draw

Analysis Methods

Entry, Exit and Setting stops: