教育

Trend lines - how to build them and how to use them?

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Before we dive into the world of trend lines, I recommend familiarizing yourself with the support and resistance zone
https://www.tradingview.com/chart/BTCUSDT/nFJAmk2S-Support-and-Resistance-levels/

Here we go:
Trend lines are one of the most universal tools for trading in any market, used in intraday, swing and position trading strategies. Properly drawn on charts, they help to predict the direction of price movement and identify trend reversals.

In addition, trend lines help you to accurately determine the optimal entry and exit points, as well as set a stop loss.

It is recommended not to rely on trend lines alone, but to integrate them with other methods of technical analysis, expanding your trading arsenal.

Often many traders draw too many lines, it is uninformative and useless

How to place trend lines on a chart?

An uptrend is a combination of at least two pullbacks

Similar in a downtrend:

Instructions for markings:

Find at least two points on the chart
Connect them with a line

But, let's remember the Axiom:
1. Randomness
2. Coincidence.
3. Regularity

Until a trendline is pushed back a third time - it is considered unconfirmed...

Once the third bounce has occurred, the line can be considered valid, but does not guarantee that it will necessarily bounce the fourth time!

Like all patterns in the market, trend patterns can be drawn on any timeframe, also - they are more effective on older ones (as well as all others)

How to use trend lines in your trading?

Frequent trades from a trend line are rebound or breakout trades

Example:
Trendline confirmed (bounced three times) - on the fourth approach we can pay attention - what happens next? Price will either bounce from our trendline again or there will be a breakout

Next example:

How can we determine whether there will be a breakout or a bounce? As I said before, you need to take into account the context: indicators, price action, nearby levels and so on (it all depends on your psychology)

How do trend lines fit together?

Support and resistance levels are areas on a chart that indicate potential pressure (on a side)

The same principle applies to trend lines. The only difference is that trend lines are sloped rather than horizontal.

How to properly label/draw trend lines?

Which trend lines are important and which ones should be ignored?

Focus only on the major pivot points
Connect at least two major pivot points.
Adjust the slope of the line to get the most amount of price touching the line, whether it is the shadows of candles or their bodies.

Important clarification - trend lines represent a support zone, not specific levels.

How can you use trend lines?

The trend is our friend. Where the trend goes, so goes we. Trading against the trend is foolish. If you do decide to do it, it must be justified!

Trend lines are the direction of the current market.
Also the trend line itself can be divided into two positions:

If the trend becomes flatter, it means that the market is moving into a state of consolidation
If the trend is becoming steeper, it means that the trend is getting stronger (or perhaps it is reaching its climax and is approaching its final stage).

Trend Lines Entry Point:
Like all other patterns in technical analysis or price action - trend lines can help you find a more favorable entry point in terms of risk-to-reward ratio

How to use a trend line to identify a market reversal?

Chances are you have encountered this before. There is a trend line breakout, you are already expecting a trend reversal, but the market continues its original movement

Like all indicators/patterns - not a panacea. Each strategy has its own risks, just when we add other osnovnopologologayuschih signs to one strategy, the chance of risking a loss - decreases!

Technique for determining a trend reversal:

Wait for a trend breakout
Wait for a lower low/maximum to form.

If the price breaks the previous minimum/maximum, most likely the trend will go in the direction of the breakdown...

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A great example from the theory

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A good example with a bounce from the trendline to the first target

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That's a great double example!

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Good pricing, if the price goes according to this plan, you can expect something like this

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Given the circumstances, we could have executed at least one strong, confident trade within this trend.
However, we had the option to wait for the breakdown and trade from the retest, which is often considered the most reliable approach. As I've mentioned before, it's essential to remember that relying solely on the trend is not always foolproof.

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A retest of the uptrend is anticipated in the near future. Your strategy should hinge upon observing the market's reaction, ensuring to await a genuine breakdown or retest before making any moves.

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Also, great example

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Another example of a good trend

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Price action analysis is the cornerstone of fundamental chart analysis, focusing solely on candlestick patterns. It embodies an entire art form that delves into the intricacies of psychology and strategic maneuvering.

Moreover, it is extremely important to regularly switch to lower time frames to effectively gauge the market reaction and determine a favorable risk-reward ratio.

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Break of the downtrend and rebound from the last support zone

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An excellent example of a confirmed uptrend followed by a breakout and retest

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A great example of recent work

註釋

To uncover genuine trading opportunities rather than mere remnants, one must devote considerable time to meticulous analysis of the charts.

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Excellent example with trend support and consolidation before breaking resistance

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A great area to look for setups into long positions

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After breaking through support and trading above it, we formed a downward trend, subsequently broke through it, fixed ourselves with a candle above and continued to grow