Drawing Trend Lines

Lines drawn at an angle above or below the price are known as trend lines.
They hint at the immediate trend and trace when a trend has changed.
They are also helpful as support and resistance by providing space to open and close positions.

 

Practice Session:

Find the trend lines. Show exercise
The trend line in an Uptrend: Drawn below the price
The trend line comprises the highs on a downtrend and the lows on an uptrend.

Practice Session:

Find the trend lines. Show exercise
A minimum of two swing highs or swing lows is required to draw a trend line.
The validity of a trend line relies on at least three highs or lows used.

The more times the price touches a trend line, the more it becomes valid as more traders use them as support or resistance.
Using the wicks or bodies of the candles
When drawing a trend line, most traders prefer wicks, and some prefer the bodies of the candlestick, which is acceptable.
The chart below is an illustration that depicts a trend line drawn using the bodies of the candles.

 Nut Shell

An overview of the lesson discussed so far:

Lines drawn at an angle above or below the price are known as trend lines.
They hint at the immediate trend and trace when a trend has changed.
They are also helpful as support and resistance by providing space to open and close positions.

Trend lines are drawn below the price in an uptrend.
Trend lines are drawn above the price in a downtrend.
A straight line must connect two lows in an uptrend.
A straight line must connect two highs in a downtrend. At least three highs or lows should connect the trend line to make it valid.
The more times the price touches the trend line, the more valid it is.
A trend line break, where the price breaks through the trend line, is another trading technique.