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Trend Lines

The document discusses trend lines in technical analysis, including how to draw trend lines, the different types of trend lines, and frequently asked questions about trend lines. Trend lines are drawn by connecting two or more high points in a downtrend or low points in an uptrend. Trend lines can be used as support or resistance levels and indicate a change in trend when broken.

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8K views31 pages

Trend Lines

The document discusses trend lines in technical analysis, including how to draw trend lines, the different types of trend lines, and frequently asked questions about trend lines. Trend lines are drawn by connecting two or more high points in a downtrend or low points in an uptrend. Trend lines can be used as support or resistance levels and indicate a change in trend when broken.

Uploaded by

sainikartik506
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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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Trend Lines

❖ Trend lines are rare and are strong (Spotted in a trending market)
❖ It is drawn using Higher Lows in an uptrend
❖ It is drawn using Lower Highs in a downtrend
❖ A good trend line has a maximum of multiple points touching both
the wick and candle body combined
❖ A trend line can be drawn using a minimum of 2 points and 3 rd point
will confirm the trend line
❖ TYPES OF TREND LINES:

1. UPTREND LINE
• An uptrend line has a slope (upward) and is formed by connecting
two or more low points.
• Uptrend lines act as support.

2. DOWNTREND LINE
• A downtrend line has a slope (downward) and is formed by
connecting two or more high points.
• Downtrend lines act as resistance
1. How to Draw a Trend Line
• The very first thing to know about drawing trend lines is that you
need at least two points in the market to start a trend line.
• The two points can be either support or resistance. From that, we
come to which trend it is following either an uptrend or a
downtrend.
• The lows used to form an uptrend line and the highs used to form a
downtrend line should not be too far apart, or too close together
• Important is getting the most touches possible without cutting
through the body of a candle.
• The higher time frames will always produce the most reliable trend
lines like 1h, Weekly, Daily, etc.

NOTE THAT AT LEAST TWO OR THREE POINTS MUST BE


CONNECTED BEFORE THE LINE IS CONSIDERED TO BE A VALID
TREND LINE.
FAQ’s

1. On which time frame to do a trend line?


A. Trend Lines can be drawn on any time frame like 5 Minutes, 15
Minutes, 30 Minutes, 1 Hour, 4 Hours, 1 Day, etc.

2. What happens when a trend line breaks?


A. When a Trend line breaks, the Trend changes.

3. Why don't we draw a trend line connecting lower lows in a down-


trending market?
A. We don’t draw a trend line connecting the lower lows because it
can make even lower lows by breaking the line.
In a Down Trending market, we should always try to make Trend
Line from the upper side of the candle which is called Lower
Highs.
4. Why can't we short an up-trending market when it Hits the upper
Trend Line?
A. We can’t short an up-Trending market because it can make an
even higher high and break the line.

5. Can we use Trend Line as an Entry for a trade?


A. Yes, we can use Trend line as an Entry
6. Can we use Trend Line as a target for trade?
A. Yes, we can use the Trend line as a target for trade.

7. Can we use the Trend Line to put our stop-loss?


A. Yes, we can use the Trend line as Stop Loss for a trade.
8. How many points are needed for a valid Trend Line?
A. We need a minimum of Two Points for a Trend Line to be valid and
respected further.
9. How often can we spot Trend Lines?
A. We can spot many Trend Lines but not as many as we can find
Horizontal Lines.

10. If I draw a trend line on 1 H TF, will it change when I change


the TF to 15M?
➢ All the timeframes are the same if you pay attention, it is just
that in the lower time frame, you will see more candles
compared to the higher time frame. Your levels will always stay
the same. You can adjust your levels even better by switching to
lower Timeframes.
11. Which Trend Lines are useful for me among all?
➢ Just like horizontal levels, the nearest trend lines are useful for
us while making trading decisions.
12. Between the wick and body, what should be touched on
the trend lines and horizontal lines?
➢ A combination of both is ok. There is no fixed rule.
Whichever seems more correct to you. The maximum
touches possible but also it should be easy to look at and tell.
13. What to do if a trend line breaks?
➢ You can take an entry on a trend line break but there is more
that we will go over in upcoming classes.

14. How many points make a trend line valid?


➢ We need a minimum of 2 points to draw a trend line
Send us all your questions at
[email protected]

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