Draw a Trendline on a Chart

How to Draw a Trendline on a Chart - How Do I Draw Trend Lines on Charts

Principles of How to Draw a Trend Line on a Chart

1. Use candle charts to draw trend lines

2. The areas used to draw a trend line on a charts are along the lows of the price bars in a bullish market. An up-wards bullish trend is defined by higher highs and higher lows.
3. The points used to draw a trend line on a charts are along the highs of the price bars in a bearish market. A downwards bearish trend is defined by lower highs and lower lows.
4. The points used to draw trendlines on the charts are the extremes areas - the high or the low price. These extremes are important because a close beyond the extreme chart points tells traders the trend may be changing. This is an entry or an exit signal.
5. The more often a trend line on a chart is hit but it's not broken, the more powerful its trend signal.

Example 1: How to Draw a Upward Trend Line on a Chart

To draw an up-wards trend line on a chart use 2 support points in a bullish upward trend so as to draw the upward trendline & then extend the trendline as cited below. The upwards trend line on a chart will illustrate the general direction of prices and as long as price is above this upward trend line then the upward trend will remain intact - bullish upward trend.

If prices move below the up-wards trend line which is the support level for the bullish upward trend then traders should close out all their open trades - because this might be a trend reversal. In an upwards trend price should generally stay above support area which is marked by the up-wards trend line on the charts.

Draw a Up Trendline on a Chart in Gold Trading

How Do I Draw an Upwards Trendline on a Chart - How Do I Draw a Trendline on a Chart

Example 2: How to Draw a Downward Trend Line on a Chart

To draw a down-wards trend line on a chart use 2 resistance points in a bearish downward trend so as to draw the down-wards trendline & then extend the trendline as illustrated below. Downwards trend line on a chart will illustrate the general direction of prices & as long as price is below this downwards trend line then the downwards trend will remain intact - bearish down-wards trend.

If prices move above the downward trendline which is the resistance area for the bearish downwards trend then traders should close out all their open trades - because this might be a trend reversal. In an downwards trend price should generally stay below the resistance level which is marked by the down-wards trend line on a chart.

Draw a Trading Down Trendline on a Chart in Gold Trading

How Do I Draw Downward Trendline on a Chart - How Do I Draw a Trendline on a Chart