Trend line is a very practical trading technique because it has important reference significance for currency price fluctuations, stop-profit and stop-loss, as well as support and pressure!
Each trader may have some different understandings of how to draw trend lines, but they are generally consistent. The trend lines drawn by different traders may be different, but as long as they are drawn correctly, the general trend is the same!
Generally speaking, the difference is not that big - because the trend is set, the trend line must correctly reflect the trend. Generally, we use the connection between inflection points to draw trend lines.
(The following is based on the 4-hour K-line of BTC from April 12 to June 9 to illustrate the 4-hour trend line within a period)
1. How to draw an upward trend line
How to draw an upward trend line: A straight line connecting the lowest point (or relative low point) of a certain time period and any low point before the highest point, without crossing any price level in between, is the upward trend line.
2. How to draw a downward trend line
How to draw a downward trend line: A straight line connecting the highest point (or relative high point) of a certain time period and any high point before the lowest point, without crossing any price level in between, is the downward trend line.
(1,2 Select BTC's 4-hour K-line in the past two months as a reference to draw the 4-hour downward and upward trend lines. The 12th line in the figure is the downward trend line, 3 is the first breakthrough of the downward trend line, and you must immediately have the awareness of a trend reversal, 4 is the point where you step back to confirm the breakthrough of the downward trend line, and 4 can enter the market as the "golden entry point", the 45th line is the upward trend line, 6 steps back to confirm that the support is effective, the best point to increase your position, the middle high point at 67 and 1 form a double top, which is the position where you must reduce your position, and 46 are all confirmation signals for the second step, which are all signals to enter the market)
3. Parallel channel pattern
During the operation of the currency price, it has been oscillating within two parallel trend lines, which is called a channel pattern.
Channel patterns can be divided into ascending channels, descending channels and horizontal channels. Investors with good skills can do small-band operations at this stage.
4. Triangle
The large triangle pattern refers to the pattern formed by connecting the highest and lowest points of two trend lines (support line and pressure line). When the price of the currency breaks through the upper track of the large triangle pattern, it means that the market is improving and it is a good buying point;
The large triangle formed at the bottom has a large room for growth in the later stage; the large triangle of consolidation in the rising process belongs to consolidation and accumulation of momentum, and there is not much room for growth in the future.
The above is an exclusive summary from Brother Sao that says you will become rich if you lead the trend. Liking, following and sharing are the greatest motivation and support for Brother Sao to continue sharing!