How to Draw Metals Trend Lines & Channels on Metal Charts
Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a metals trend which is a sustained movement in one direction either upward or downwards.
A metals trend line depicts the points of support & resistance for the metals price, depending on the direction of the market. For an upward moving metals market trend - the metals trend line will shows the points of support and for a downward moving metals market trend - the metals trend line will show the areas of resistance - metals trend-lines are mainly used by many metal traders to determine these resistance and support levels on metals charts.
A Metals Trend line is a slanting straight line that connects two or more metals price points then extend into the future to act as areas of support or resistance. There are two different types of metals trend lines: upward metals trend line and downward metals trend line. Metals trend line is an aspect of metal trading analysis that uses metals line studies to try and predict where the next metals price move will head to. A trader must know how to draw and interpret metals signals generated by this metals trend line tool.
The basis of this metal trading analysis is based upon the idea that metals markets move in trends. Metals trend lines are used to show three things.
- The general direction of the market - up or down.
- The strength of the current metals trend - and
- Where future support & resistance will be likely located
If metals trend lines forms in a certain direction then the metal market usually moves in that direction for a period of time until a time when this metals trendline is broken.
Drawing these metals trend-lines on a metals chart shows the general metals trend of the metal market which can either be upwards or downward.
Below is an example of how to draw these metals trend lines on metals charts
Guide:How to Draw Upward Metals Trend Line and Trade Upward Metals Trend Move
Course: How to Draw Metals Downward Metals Trend-Line & Trade Downwards Metals Trend Move
The MT4 metals trading software provides metals charting tools for drawing these metals trend lines on metals charts. To draw metals trend lines onto a metal chart, metal traders can use the metals trading tools provided on the MetaTrader 4 software that is shown below.
To draw metals trend-lines on a metals chart just click the Metal MetaTrader 4 Draw Metals Trend Line Tools as shown above on the MT4 platform technical analysis software and select point A where you want to start drawing the metals trend line and then point B where you want the metals trend line to touch. You can also right-click on metals trend line & on the properties option choose the option to extend its ray by ticking the "ray check box", if you do not want to extend the metals trendline, then uncheck this option in your MetaTrader 4 metal trading platform. You can also change other metals trend line properties such as color and width on this property popup window of the metals trend line properties. You can download MT4 software and learn metals trend-line technical analysis with it.
The metals trend is your friend. Is a popular saying among investors because you should never go against it. This is most reliable method to trade Metals because once metals prices begin to move in one direction they can continue to move in that particular direction for quite some time - therefore using this metals trend method presents opportunity to make profits from the metals trading market.
Principles of How to Draw Metals Trendlines
Use metals candle charts
- The points used to draw the metals trendline are along the lows of the metals price bars in a rising metals trading market. An upward bullish metals trend move is defined by higher highs & higher lows.
- The points used to draw the metals trendline are along the highs of the metals price bars in a falling market. A downwards bearish metals trend move is defined by lower highs and lower lows.
- The points used to draw metals trend lines are extremes points - the high or the low metals price. These extremes are important because a close beyond the extreme tells investors the metals trend might be changing. This is an entry or an exit signal.
- The more often a metals trend-line is hit but it's not broken, the more powerful its signal.
There are 2 main ways of trading this metals trend line technical analysis set-up:
- The Metals Trend Line Bounce - Metals Trend Line Bounce
- The Metals Trend-Line Break - Metals Trend Line Break
Technical Analysis Methods of Metal Trendlines
The metals trend-line bounce is a continuation metals signal where metals price bounces off this metals trend line to continue moving in the same direction. In a downward metals trend, the metal market will bounce downwards after hitting this metals trend line level which is the resistance level. In an upward metals trend, the metal market will bounce upwards after hitting this metals trend line level which is the support level.
The metals trend-line break is a reversal metals signal where the metal market goes through the metals trend line & starts moving in the opposite direction. When a up metals trend is broken then the sentiment of the metal market reverses and becomes bearish and when a down metals trend is broken then the metal market sentiment reverses & becomes bullish.
For very strong metals trends, after this metals trend line break trading signal, the metals price will consolidate for some time before moving in the opposite direction. For short term metals trends then this metals trend-line break metals signal will mean metals price may reverse immediately.
In metals trading, both the metals trend line bounce & the metals trend-line break that are used in technical analysis charts are based upon these metals trend line levels being support & resistance levels.
Entry, Exit and Setting stops:
This metals trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these metals trend lines. The metals trend line bounce is a low-risk entry method used by metal traders to place entry trades after metals price has retraced. Metals trades are setup along these metals trend line levels and a stop loss placed just above or below these metals trend lines.
The metals trend-line break is a crucial technical indicator of possible metals trend reversal. When the metals trend line is broken the metals price starts move in the opposite direction. This provides an early exit signal for metal traders to exit their open trades and take profits. When there a penetration of these metals trend line levels, it is a signal that the metals price can start moving in opposite direction.
Unlike other metal trading analysis indicators there is no formula used to calculate the metals trend line, this metals trend line formation is just drawn between two chart points on the metals chart.
