How Do I Draw Stock Trend Lines Correctly?
How to Draw Stock Trend Lines Correctly - Detailed Tutorial on How to Draw Stock Trend Lines Correctly
Principles of How to Draw Stocks Trend Lines Correctly
Use stock candle charts
- The points used to plot are along the lows of the stocks price bars in a bullish stock market. An upward bullish stock trend is defined by higher highs and higher lows.
- The points used to plot are along the highs of the stocks price bars in a bearish stock market. A downwards bearish stock trend is defined by lower highs & lower lows.
- The points used to draw stock trend lines are extremes points - the high or the low stock price. These extremes are important because a close beyond the extreme tells stock traders the stock trend might be changing. This is an entry or an exit stock signal.
- The more often a stock trend line is hit but not broken, the more powerful its stock trend signal.
Example 1: How to Draw Stocks Trading Upwards Stocks Trend Line Correctly
To draw an upwards stock trend line correctly use two support points in a bullish upward stock trend so as to plot the upwards stock trend line & then extend the stock trend line as displayed below. Upward stock trend-line will show the general direction of stock prices & as long as stocks price is above this upwards stock trend line then the upwards stock trend will remain intact - bullish upward stocks trend.
If stock prices move below the upwards stock trend line which is the support level for the bullish upwards stock trend then traders should close all their open stocks trades - because this might be a stock trend reversal signal. In an upward stock trend stocks price should generally stay above the support area which is marked by the upward stock trend line.
How to Draw Stock Trend-Lines Correctly for Upward Stock Trading Trend
How to Draw Stock Trading Upwards Stock Trendline Correctly - How to Draw Stock Trend Lines Correctly
Example 2: How to Draw Stocks Trading Downwards Stocks Trend Line Correctly
To draw a downward stock trend line correctly use two resistance points in a bearish downward stock trend so as to plot the downward stock trend line & then extend the stock trend line as shown below. Downwards stock trend-line will show the general direction of stock prices & as long as stocks price is below this downwards stock trend line then the downwards stock trend will remain intact - bearish downwards stocks trend.
If stock prices move above the downwards stock trend line which is the resistance level for the bearish downwards stock trend then traders should close all their open stocks trades - because this might be a stock trend reversal signal. In an downward stock trend stocks price should generally stay below the resistance area which is marked by the downwards stock trend line.
How to Draw Stock Trend Lines Correctly for Downward Stock Trading Trend
How to Draw Stock Trading Downwards Stock Trendline Correctly - How to Draw Stock Trend Lines Correctly
