Downwards Trendlines & Channels

Downward Trend Line MT4 Trend Line Indicator

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

Since price moves down in a zigzag manner traders normally draw a down ward trendline which shows the general downward direction of the prices. In silver market technical analysis, this general price direction is referred to as the TREND by traders. In silver technical analysis definition we can define this silver down silver trend-line is plotted on a chart showing the resistance areas (bearish market direction).

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

Silver Down silver trend-lines gain more validity each time price touches the down-wards trend line but does not penetrate the trend line. A down silver trend remains the general direction until this series of lower highs and lower lows is broken.

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

Downward Trend Line MT4 Trend Lines Indicator

When it comes to learning how to draw & learning technical analysis of charts, you need to know that when the market is bearish it forms lower lows and lower highs forming a downwards general market direction. These are the points that are used to draw the downward trend line.

To draw this downward trend setup we use resistances and to do it correctly two resistances are needed. When price touches this trend line, then we sell and place stop loss just a few pips above the sloping resistances:

Trading This Downward Trend Market Move

When trading with this trend line method, this trend line setup will show the general direction of the market as downward therefore traders will only open short sell trades. These are the levels where if price retraces then these points will provide strong resistance. This is why many short sellers will wait until price retraces up-wards & hits these retracements levels to open sell trades. Silver trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.

For Example, in the above example, a trader would have opened short sell signals at the resistance1, resistance2, resistance3 and these sell trades would have made a lot of profits with minimum amount of draw-down/retracement.

Downward Channel MT4 Channel Indicator

A downward channel is plotted by plotting a line that's parallel to the downward trend-line & then adjusting it to touch the bottom boundary of the price movement. This then forms a down ward silver channel & as long as the price stays between these two channels the general market direction is intact the market direction will continue being bearish.

Trading The Downward Channel

The downward channel is used by traders to show levels where it is best to take profits. traders will take some profit once the price touches the lower channel & wait for another retracement before opening a short sell xagusd trade again.

MT4 Tools For Drawing Channels

The silver tools to draw these silver channels studies on the MT4 charts can be found on the Lines Toolbar within the MT4 platform, to access this MT4 tool-bar if it's not activated on your Meta Trader 4 Platform, Click in 'View' Next to 'File' at the tops left corner of the MT4 Platform and click View, Then Click on Tool Bars, Then Check the Lines Tool Bar by clicking on it.

Below is the screenshot of these MT4 tools: just click on this MT4 channels drawing tool and select the point to where you want to place this silver channels tool on the chart.

MetaTrader 4 Technical Analysis Charts - Downward Channels

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

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