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