MT4 Tools for Drawing Trendlines and Channels

How to Draw Down-ward Trend Lines on Charts

A downwards trendline is drawn above the downwards trend setup formed by consecutive lower highs, the downwards trend-line must connect at-least two highs, with the recent most high being lower. For our downward trend examples we shall use the MT4 trading analysis software charts to illustrate an example of downward xauusd trend.

Since xauusd price moves downwards in a zig zag manner traders normally draw a downward trend line which shows the general downward direction of the prices. In market technical analysis, this general xauusd price direction is known as the TREND by traders. In xauusd analysis definition we can define this down trendline is plotted on a chart showing the resistance zones (bearish market direction).

How Do I Draw Downward Trendlines on Charts? - Trend Line Trading Signal Technical Analysis

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

Down trendlines gain more validity every time xauusd price touches the downwards trendline but does not penetrate the trendline. A down trend remains the general direction until this series of lower highs and lower lows is broken.

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

Drawing a Downward Trend-Line

When it comes to learning how to draw & learning trading analysis of charts, you as a gold trader need to know that when market is bearish it forms lower lows & lower highs forming a down-ward general market direction. These are the points that are used to draw the downward trend line.

To draw this downwards trend setup we use resistances & to do it correctly two resistances are needed. When xauusd price touches this trendline, then we sell and place stoploss order just a couple of pips above the sloping resistances:

How Do I Draw Downward Trend Lines on Charts? - How Do You Interpret MT4 Downward Trendline?

How Do I Trade Down-ward Trend Line

When trading using this trendline 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 pulls back then these points will provide strong resistance. This is why many short sellers will wait until xauusd price retraces up-ward & 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 trading example, a xauusd trader would have opened short sell trading signals at the resistance1, resistance2, resistance3 and these sell xauusd trades would have made a lot of profits with minimum amount of drawdown/retracement.

Downwards XAUUSD Channel MT4 Channel Technical Indicator

A downward channel is drawn by drawing a line that's parallel to the downwards trendline & then adjusting it to touch the bottoms boundary of the price movement. This then forms a downward channel and as long as price stays between these two channels the general market direction is intact the market direction will continue to be bearish.

How to Draw Down-ward Trendlines on Charts - Platform MetaTrader 4 Tools for Drawing Trend Lines and Channels on Charts

Trading the Downward XAUUSD Channel

The downwards channel is used by traders to show levels where it's best to tp orders. Traders will book some profit once the price touches lower channel & wait for another retracement before opening a short sell trade again.

Downwards XAUUSD Channels MT4 Channels Indicator

The trading tools to draw these channels studies on the MT4 charts can be found on the Lines Tool Bar within the MT4 software, to access this MT4 tool-bar if it's not activated on your MT4 Software, Click in 'View' Next to 'File' at the top left corner of the MetaTrader 4 Platform Software & click View, Then Click on Tool Bars, Then Tick the Lines Tool Bar by clicking on it.

Shown Below is the screenshot of these MetaTrader 4 tools: just click on this MT4 channels drawing tool & select the point to where you as a trader want to place this channels tool on the trading chart.

MT4 Analysis Charts - Downward XAUUSD Channels

Platform MT4 Tools for Drawing Trend Lines and Channels on Charts

MT4 Toolbar - MT4 Tools for Drawing Trend Lines and XAUUSD Channels used to obtain these trendline drawing tools is shown above, to draw these trendline set-ups or channels, just select the above MT4 trendline drawing tools shown on the MT4 software and select the two points where you want to draw the downwards trend line.

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

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