The trendline is the most common form and the basis of technical analysis. Where with this trendline could signal a reversal, retracement, sale / purchase. But the fact is also much less utilize trendline traders to analyze price movements (chart).
And if described correctly, trendline can provide accurate signals its other technical analysis methods.
Thing that often happens is that traders do not make the trendline according to market conditions (rule right), on the contrary, they draw a line in accordance with the wishes of their own trading.
Well, so how do draw a trendline correctly?
First Line Uptrend / Bullish:
The line drawn along the points / areas of support (valley), which means at the bottom of the price movement (chart)
Both downtrend line / Bearish
The line drawn along the points / resistance areas (peaks), which means at the top of the movement of prices (chart)
Because the condition is a line to draw the line is that you can find 2 point 2 point support or resistance and tail. Tail in this case could be interpreted as a point-to-3, the confirmation point. Or easy to pull off 3 points will be obtained quality trendline which is more accurate.
Well let’s see illustration below. You can see an example of how to draw the line trendline. There are three common types of trendline line, namely:
* Uptrend: bullish trendline (blue line)
* Downtrend: bearish trendline (red line)
* Sideways Trend: sideways trendline / sideway (black line)
Some important things to remember about the trendline:
* It takes at least two peaks or valleys point to draw a valid trendline but needed a point to 3 to confirm the trendline.
* If you find a trendline that intermittent, or otherwise not in one straight line lengthwise, it is likely that the trend will soon end and there was a break (change trends). The more disconnected or terraces, the greater the tendency.
* Outline the trend will be stronger / valid if they made it through the test. Where the price movement / support / resistance can not crashing (break) lines.
* And most importantly, NEVER forced to draw a trend line to be in accordance with the wishes of trading (analysis) alone, or with the conditions of the market though. If after you describe the rules that did not fit right and mean left alone, assuming the current trendline can not be used.
* In the application forex trading (stocks, etc.), facilities or tools to draw a general line of his has been provided. But about her draw a line from where to where, you yourself still to decide.
Good luck and try to trendline.