Meta Trader 4 Tools for Drawing Trend Lines & Channels
An upwards trend line is drawn below the trend setup by connecting at least two lows. This upwards trend line will draw a line that show the overall direction of the market.
The diagram below shows how xauusd price moves when it is moving in a bullish market. The price will move upward forming support regions.
Since the market moves in a zigzag manner traders normally draw a trend line which portrays the general upward direction of the market.
A up trend occurs when the fore price will continue to make consecutive higher highs & higher lows. Each price high is higher than the previous high - higher high, and each low is higher than the previous low - higher low.
Up trend-lines gain more validity every time xauusd price touches this upwards trend-line but does not penetrate it. A up trend remains in place until this sequence of higher highs & higher lows is broken.
A down-side penetration of an upwards trend line is a trading sell trading signal, and usually the first indication that an upward trend might soon end.
Upward Trend Line MT4 Trend Line Indicator
When the market moves upwards it forms higher highs and higher lows forming a bullish market movement - Up-ward Trend. An upwards trend line can then be drawn by connecting these higher lows.
To draw this upward trend line setup we use supports. To draw the upward trend line correctly two support areas are needed. When xauusd price touches the upwards trend line we buy and place stop loss orders just a couple of pips below the upwards trend-line. Diagram below shows an example of an upward trend-line.
The upward trend line setup will show the general direction of the market as bullish therefore traders only will open buy long xauusd trades as long as trading price is within this upward trend bullish market setup and within the support areas. These support areas are the levels where if the market retraces then these points will provide strong supports for the market price. This is why many buyers will wait til xauusd price retraces down ward and hits these retracements levels market the upward trend line to open buy trades. Trades opened at this support levels have a high Risk to Reward Ratio with minimum draw down.
In the above upward trend line trading setup the trader would have opened buy/long xauusd trades from the signals generated at the support1, support2, support3 and these trades would have made a lot of profits with minimum amount of draw-down/retracement.
Upward Channel MT4 Channel Technical Indicator
An upwards channel is drawn by plotting a line that's parallel to the upward trend line and then adjusted to touch the tops boundary of the price movement. This then forms an upwards channel & as long as price stays between these two channels the bullish market movement will continue heading upwards.
How to Trade Up-ward Channel
This upward channel is used by traders to show levels where it's best to take profit orders. Traders will book some profit once the price touches upper channel & wait for another retracement before opening a long buy trade again.
MT4 Tools for Drawing Trend-Lines & Channels
The MT4 Trend Line Indicator drawing tools to draw these trend lines & channels setups on the MetaTrader 4 are located on the MetaTrader 4 drawing toolbar within the MetaTrader 4 software, To access this MetaTrader 4 tool bar if it is not activated on your platform, Press in "View" Next to the "File" on the top left corner of MetaTrader 4 platform & click View, Then Press on Tool-Bars, Then Tick the "Lines ToolBar" by pressing on it.
Below is the screen-shot Image of the MT4 drawing toolbar. To draw a trendline on a trading chart click on this Meta Trader 4 trendline plotting tool and select the point where you as a trader want to plot the trend line.
This is one of the learn trading analysis lesson among the many learn trading tutorials on this website located on the side navigating menu, where you'll learn how to draw trend lines & analyze these trend lines setups.
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