How to Read Downward Indices Trend Lines on Stock Indices Charts
Indices Trade Downwards Stock Indices Trend Lines on Indices Charts
A downward indices trend line is formed by consecutive lower highs on the stock indices price chart - the downward indices trend line is drawn downwards connecting these lower highs - the downward indices trendline must connect at least two stock indices price highs - with the most recent stock indices price high being lower.
Because stock indices price moves downward in a zigzag manner -indices traders will draw a downward indices trend line showing the general downwards stock indices price direction. In indices technical analysis - this general direction of stock indices price is known as the Indices Trend. In stock indices technical analysis -indices downward trend-line is drawn on indices chart showing the resistance areas.
How to Read Downward Indices Trend Lines on Indices Charts
A indices downward trend occurs when the stock indices price makes a series of lower stock indices price highs & lower stock indices price lows. Each stock indices price high is lower than the previous stock indices price high - lower high, and each stock indices price low is lower than the previous stock indices price low - lower low therefore showing a downward movement of indices price.
How to Analyze Downward Indices Trend Lines on Stock Indices Charts
Indices downward trend lines gain more validity each time the stock indices price touches the downward indices trend line but doesn't penetrate the downward trend line. A stock indices downward trend remains the general direction of stock indices price movement until this series of lower highs and lower lows is broken.
In stock indices technical analysis - An upside penetration of a indices downward trend line is interpreted as a reversal indices signal, and is interpreted that the bearish downward movement of indices prices may soon reverse.
Indices Trade Downwards Stock Indices Trendlines on Stock Indices Charts
To learn how to draw and analyze indices downward trend, you need to know that in indices trading when the indices trend is bearish it forms lower lows and lower highs on the stock indices price chart - forming a downward general market movement direction. These are the chart points that are used to plot the downward indices trend line.
To draw the downwards indices trend line -indices traders use resistance levels and to draw the downward trend line correctly two resistance levels are required. When the stock indices price touches this downward trend line -indices traders will open sell stock indices trades & place stop loss stock indices orders just a few pips above the downward indices trend line:
How to Read Downward Indices Trend Lines on Indices Charts
Indices Trade Downwards Stock Indices Trendlines on Stock Indices Charts
When trading with this downward trend line method - the general direction of the market is interpreted as downwards and therefore indices traders will only open sell stock indices trades when trading this downwards trend line setup. The downward trend line shows the levels where if the stock indices price retraces then these levels will provide strong resistance. This is why these levels are used by many stock indices traders to determine when to open sell stock indices trades. Indices trades opened at these levels will have a high Risk to Reward Ratio with minimum draw down - minimum stock indices price retracement.
For example, in the above indices downward trend line example - a trader would have generated sell signals at the resistance 1, resistance 2, resistance 3 and these sell stock indices signal would have made good stock indices trades with minimum amount of draw down ( stock indices price retracement).
Downwards Indices Trend Lines
The MT4 indices tools to draw these trend-lines in MT4 stock indices trading charts are found on the Lines Toolbar within the MetaTrader 4 platform, to access this MetaTrader 4 tool bar if it is not activated on your MetaTrader 4 Indices Platform, Click in "View" Next to "File" at the tops left corner of the MetaTrader 4 Indices Platform & click View, Then Click on the Toolbars, Then Tick the Lines Toolbar by clicking on it.
Shown Below is the explanation of these MetaTrader 4 trend line drawing tools: just click on this MetaTrader 4 trend lines drawing tool and select the points where you want to place this indices trend lines on the stock indices trading chart.
MT4 Technical Analysis Charts - Downwards Indices Trend Lines
Indices Trade Downwards Stock Indices Trend Lines on Indices Charts?
MT4 Charts Toolbar - MetaTrader 4 Tools for Analyzing Indices Trend Lines used to draw indices trend lines is shown above - to draw these trend lines - select the above MetaTrader 4 indices trendline plotting tool and select the two chart points where you want to plot the downward trend line.
Trend line indices trading strategy is one of the most popular indices technical analysis methods used by stock indices traders to analyze and read indices trend moves.
How to Read Downward Indices Trend Lines on Indices Charts
