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Spotting Opportunities: What Is A Trend Line?

A trend line identifies trends and potential reversals by connecting highs or lows on a price chart. To draw accurate trend lines, one should use higher time frames like daily or 4-hour charts, aim for at least three touches without cutting wicks, and not force the line to fit. Well-drawn trend lines can help spot opportunities at support or resistance for breakouts in the opposite direction of the trend.

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231 views1 page

Spotting Opportunities: What Is A Trend Line?

A trend line identifies trends and potential reversals by connecting highs or lows on a price chart. To draw accurate trend lines, one should use higher time frames like daily or 4-hour charts, aim for at least three touches without cutting wicks, and not force the line to fit. Well-drawn trend lines can help spot opportunities at support or resistance for breakouts in the opposite direction of the trend.

Uploaded by

danielhsc
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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How to Draw Trend Lines

Perfectly Every Time CHEAT SHEET

WHAT IS A TREND LINE?


A trend line is the diagonal equivalent of a horizontal level of support or resistance.
As traders, we use them to identify trends and spot potential reversals.

4 KEYS TO DRAWING TREND LINES ACCURATELY


✓✓ Use the higher time frames (daily and 4-hour charts)
✓✓ Aim to get as many “touches” as possible without cutting off too many wicks
✓✓ Trend lines with at least three touches tend to be the most reliable
✓✓ Never force a trend line to fit – the best ones will be obvious

SPOTTING OPPORTUNITIES

Look for setups that form Watch for a breakout in the opposite direction.
at trend line support or resistance. This trend line on the GBPCHF was one of the best
This bullish rejection candle on the GBPCHF I had seen in quite some time. Following the close
formed along trend line support, creating a below support, the pair retested the level’s new
favorable opportunity to get long. resistance before selling off.

The USDJPY had consolidated into a wedge. This trend line on the GBPJPY was in place for
Following the break above trend line resistance, nearly two years before breaking down. The result
the pair retested the level as new support and was a 5,800-pip drop, making it one of the most
formed a bullish pin bar in the process. advantageous and profitable trend line breaks I
had ever witnessed.

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