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Lines, trendlines and channelsLines are one-dimensional figures that extend endlessly into a future and which connect the price segments on a chart. They are often used to determine a trend and particular support and resistance levels. Lines are easy to draw and use as technical tools. Over time, lines became implemented into various trading systems such as Andrews' Pitchfork and Gann Fan Lines. However, lines have countless more uses. For example, lines can be used to section particular parts of a price pattern. Additionally, they can be used to draw horizontal support and resistance levels. Lines also find utility in measuring the speed of the price ascend or descend. Furthermore, they can be deployed in various trading strategies and used to identify a trend. Illustration 1.01 The picture above shows the daily chart of Microsoft Corporation stock. A simple dashed line (white) measures the percentual decline between 22nd November 2021 and 8th March 2022. Trendline The trendline is a simple line that connects prices across a chart. It reflects a primary trend in the prices of stocks, commodities, etc. Trendlines can be used to construct channels and numerous different bodies. In addition to that, trendlines can also act as resistance or support. Illustration 1.02 Illustration 1.02 shows Lockheed Martin stock on the daily chart. It also shows the trendline (white) pointed to the upside as it cuts through a substantial portion of lows. Channels Channel can be constructed by two parallel trendlines, which act as support and resistance levels. A channel can be sloped upward or downward depending on the general trend of prices. When a channel is correctly determined and drawn, the price often moves between the two boundaries. However, occasional breakouts occur. As a result, they establish a new trend or validate a current one once the price returns to a channel. Illustration 1.03 The image above shows the daily chart of gold. The channel (white lines/boundaries) can be observed as well. False breakout took place on 27th January 2022. However, the price retraced back into the channel on 9th February 2022. Resistance and support levels Often, a line or trendline acts as a particular support or resistance level. The function of these two levels is to halt price rise or decline. Typically, it is considered bullish when resistance is penetrated to the upside. Contrarily, when support fails to hold selling pressure and breaks, it is usually a bearish sign. Resistance and support can be drawn by a simple horizontal line. However, resistance and support can be at a slope. That is common, for example, for channels in a strong uptrend or downtrend. Generally, the significance of support or resistance grows with an increasing number of successful halts being put to a price rise or decline. Illustration 1.04 Illustration 1.04 portrays the daily chart of Bitcoin. Major support and resistance levels are indicated by white horizontal lines. The first top also acts as the resistance of utmost significance as the price previously halted its rise at this level. Speed lines Speed lines are three consecutive lines used to estimate future support and resistance levels. In an uptrend, speed lines are constructed by creating a box connecting a low point in the lower-left corner and a high point in the upper-right corner. Next, a vertical line connecting these two points is sectioned at each third and in the middle. Then a speed line is drawn from the actual low in the lower-left corner through the right side of a box where sections were marked. These speed lines are extended into the future and considered to estimate natural support and resistance levels. Modern techniques include creating speed lines, such as sectioning a box according to Fibonacci ratio numbers. Illustration 1.05 The picture above shows Tesla stock on the daily chart. It also shows the unconventional construction of speed lines from a box cut into four equal sections. Disclaimer: This content serves solely educational purposes.
NYSE:AMCEducation
by Tradersweekly
4
Indicator introduction: Auto Trendline & Breakout AlertNote: This indicator will be published soon In short, this indicator is a tool designed for different purposes: 1) Automatic drawing of trend lines 2) Classification of trend lines based on the reaction of price chart and trading volume 3) Receiving trend lines breakout alerts 4) Analyzing smaller time frames is time consuming and tedious, but this tool makes it easy. The following figure shows 15-min time frame: How it works? Trend lines are classified into 6 levels, of which only 3 are enabled by default. Level 01 (Red Lines) is the strongest level. Therefore, the breakout of these lines is the most important signal of this indicator. Volume verification helps you avoid fake Breakouts. As you can see, both the labels and the table show the status of the trading volume when the lines breakout. Trading volume is classified into 5 levels: Over volume (confirmed ✅) High volume (confirmed ✅) Neutral Low volume (potential fake breakout ❌) Minor volume (potential fake breakout ❌) This indicator can be used on both logarithmic and linear charts. (Scale in the settings menu can be changed from linear to logarithmic) Finally, this indicator includes a trend line breakout alert and you can be notified wherever you are. you can add alerts to different charts and enter the market in the best conditions. If you like it, please leave a comment.
NASDAQ:QQQEducation
by BobRivera990
7
Indicator introduction: Auto Trendline & Breakout AlertNote: This indicator will be published soon In short, this indicator is a tool designed for different purposes: 1) Automatic drawing of trend lines 2) Classification of trend lines based on the reaction of price chart and trading volume 3) Receiving trend lines breakout alerts 4) Analyzing smaller time frames is time consuming and tedious, but this tool makes it easy. The following figure shows 2-H time frame: How it works? Trend lines are classified into 6 levels, of which only 3 are enabled by default. Level 01 (Red Lines) is the strongest level. Therefore, the breakout of these lines is the most important signal of this indicator. Volume verification helps you avoid fake Breakouts. As you can see, both the labels and the table show the status of the trading volume when the lines breakout. Trading volume is classified into 5 levels: Over volume (confirmed ✅) High volume (confirmed ✅) Neutral Low volume (potential fake breakout ❌) Minor volume (potential fake breakout ❌) This indicator can be used on both logarithmic and linear charts. (Scale in the settings menu can be changed from linear to logarithmic) Finally, this indicator includes a trend line breakout alert and you can be notified wherever you are. you can add alerts to different charts and enter the market in the best conditions. If you like it, please leave a comment.
NASDAQ:TSLAEducation
by BobRivera990
4
TD line and projectionHere you can see how to use Tom Demark trendline (that connnects peaks / thorough of more or less equal height / value) and projections. Best of breakout occur with gaps. Prebreakout candle has to close close to the trendline and make a minor pullback before the break occurs. If breakout candle has long rejection shadow - it will not work. Projection are drawn from the lowest closing price to the TD line and then projected from breakout point. You can also see how to use missed pivots that mark new trends (buy upon pullback to the next pivot) - after Rob Booker.
UEducation
by ICFX
2
Bollinger Band and T-Line TimingHere is a method to track current trends and spot reversals. This technique combines two separate indicators, the Bollinger Bands (BB) and the T-Line . Bollinger Bands contain three parts. First is a 20-period simple moving average, the middle band ( purple line ). Second is the upper band and third is the lower band ( blue lines ). Both of the upper and lower bands are two standard deviations away from the middle band. This sets up a powerful and visual summary of historical volatility. Thus, price is unlikely to trade above the upper band or below the lower band. When price does move outside of these ranges, it retreats back into range very quickly. So, Bollinger Bands are a great “probability matrix” to time and control both entry and exit. Rick Saddler coined the term “ T-Line ”. The T-Line ( red line ) is an 8-day exponential moving average of price that yields surprisingly reliable signals for changes in price direction. The general rule is that when price is above the T-Line, it remains bullish until it crosses below and closes for at least two sessions. This sets up a bearish reversal. When price is below the T-Line, the prevailing bearish trend continues until price crosses above and closes above for at least two consecutive sessions. Taken apart, Bollinger Bands and the T-Line are powerful on their own. However, when used in combination, you set up a dynamic trading range, making it easy to spot when a trend begins and ends. As price advances, the BB upper band represents resistance and the T-Line is support. When prices are moving lower, the T-Line is resistance and the BB lower band is support. The chart for the S&P 500 (SPX) demonstrates the trend and exit signals this combination provides. The first crossover in early February was bullish, marked by the move of price above the T-Line. Price moved up over 45 points to the high before the crossover reversal. In late February, price was trending lower with considerable strength and many gaps. The retracements occurring in the second week could have been viewed as reversals, except for one important signal: Close price remained below the T-Line from February 24th entry at 3226 all the way down to End-March when it traded at a low of 2192. Price did close above the T-Line toward the beginning of March, but immediately crossed back and closed below the T-Line the next day. Since price did not close above the T-Line resistance for two consecutive sessions, this bearish trend continued. This was further supported by the BB lower band, marking dynamic support. On February 27th, price broke the Bollinger Band Support and created a Bollinger Band Snap. This could be used as an exit, since price had moved down almost 250 points from the open, resulting in a profit, and price is unlikely to stay trading below the lower Bollinger Band for long. If one exited based on the strong Bollinger Band Snap on February 27th, a re-entry can be taken on March 6th, with a confirmed close price below the T-Line at the 2973 price level and continuing down to about $2192. How would you know when this bearish trend would end? Resistance was marked by the T-Line and support by the lower Bollinger Band. This did not end until March 25th when price closed above the T-Line for the second session in a row, indicating an end to the bearish trend, and a total move of over 750 points. The third crossover took price back into bullish territory, this time marking the end to a four-week bearish trend and the start of a new bullish move. Price crossed above and closed for two consecutive sessions on March 25th. The S&P 500 moved up over 150 points, before it reversed and closed below the T-Line on April 1st. However, even though most of the price activity took place below the T-Line on April 2nd, it did not close below the T-Line. This type of price activity may warrant a protective stop since the close of the bar was just barely above the T-Line. Price moved back above the T-Line and continued its move higher with another one day close below the T-Line on April 21st. When did the actual trend exit appear? May 4th, when price closed below the T-Line for the second session in a row. This combined Bollinger Band and T-Line dynamic trend tracking is reliable and it can be used effectively in many ways. First, as shown at the beginning of the chart, it shows a long entry and provides profit opportunity as the index rises. Second, a crossover, with a confirmed second session close, is the exit point for leaving a current trend, taking profits, or for entering a new trend based on the newly revised price direction. Third, as shown in the February 24th trend, using a Bollinger Band Snap to signal a time to take profits and exit the position as price generally will retrace back inside the Bollinger Bands. Fourth, using a desired profit target based on historical research on the selected underlying and exiting once that profit target is reached. This solves the most disturbing aspect of short-term options trading. When do you exit a trade? Even with the lack of price-specific reversal signals, the combined use of the Bollinger Bands and the T-Line are a powerful and reliable system to improve timing.
SP:SPXEducation
by NewCycleTrading
39
How to filter out the noiseIn this post I will demonstrate one of the techniques that you may use to filter unnecessary noise from the chart. For that purpose we will use Three Line Break charting (invented in Japan) along with a Japanese trend indicator Ichimoku Kinko Hyo. Line break charts were developed in Japan and popularized here by Jewish American author Steve Nison (the man who revolutionized technical analysis by introducing Japanese candlestick charting techniques to Western traders) in his book "Beyond Candlesticks" (2009). In that book, Steve Nison unveils the mysteries of four more of Japan's most closely guarded financial secrets - Kagi, Renko and Three-Line Break charts. Three Line Break charts show a series of vertical green and red lines (bars); the green lines (bars) represent rising prices, while the red lines (bars) portray falling prices. Prices continue in the same direction until a reversal is warranted. A reversal occurs when the closing price exceeds the high or low of the prior two lines (bars). The green and red bars on the price chart are called “lines”. Second, line (bars) changes are based on closing prices, not the high-low range. Third, Three Line Break charts evolve based on price, not time. Each new closing price produces three possibilities: 1 A new line of the same color is drawn when the price extends in the same direction. 2 A new line in the opposite color is drawn when the price change is enough to warrant a reversal. 3 No new lines are added when price does not extend the trend or the change is not enough to warrant a reversal. Good luck! Roman IC Finance
Education
by ICFX
1
THE TREND IS YOUR FRIEND... but don't trend trade!!As you have probably heard do not trade against the trend. I'm going to assume you know what this means but if you don't read the bottom paragraph first. Trading with the trend is obviously much more beneficial to us, and its clear why we shouldn't go against it. But have you tried being a trend trader? Aka a person who tries to identify trends and rides these huge moves out and scales in along the way? For starters markets range 90% of the time, so only in 10% of market conditions are you going to succeed. Assuming you don't miss the big move because of all the previous losers and break evens you had in ranging conditions which filled you full of self doubt. There are people who successfully trend trade, and I ask myself why bother??? It is such a struggle, you have to go through so many loosing streaks and keep calm and collected until that big move comes and you're in on it. For me that is too much stress and too much of a strain on my brain. Trade with the trend when there is one of course. Only buy if there is a clear uptrend and sell if there is a downtrend. But in my advice I would steer clear of trying to follow the trend orcatch these big moves; you'll get chopped up hard in between! I like it simple. See where people just got wiped out by the banks and follow the big boys. Do you want to join our gang Haha? You stay classy San Diego. ***** Trading with the trend is only buying in an uptrend, and only selling in a downtrend, if you do not know what a trend is, message me or google "How to identify a trend in trading" *****
Education
by joebrownFX
What Support Looks Like When It BreaksLooking at the m15 chart only can lead you to have the correct idea but in the wrong place. By looking at high time frame charts you get a better picture of when a trend is in place, when a trend is no longer working or when there is no trend and we're in a range. On the attached charts a daily time frame (top left) has a defined up trend and at 1.6700 the trend line and price meet for the 3rd time of Sept 27th. Here traders wanting to keep adding to long trade would initiate a long trade. However by the close of the daily candle that idea is no longer valid, as the trend line did not hold as support. Moving down through the smaller time frames we see that the days leading up to the 27th September have been consolidated into small daily moves. There is a clear line of support under these days that is clearly broken on the H1 chart etc. This equates to the time when the Daily candle approaches the rising trend line. What we see happen next is that the broken daily horizontal support is now acting as horizontal resistance and price is trapped between this new horizontal resistance and the rising daily up trend. When the horizontal resistance holds and the daily rising trend line are broke on the H1 candles traders waited for a quick retest and then went short. Accelerating the move.
Education
by OctaFX_Official
2
Big Experiment (part 2). Line Break ChartBITFINEX:BTCUSD Dear friends, I continue my big experiment with different chart types. In the previous training article, I described the advantages and disadvantages of Renko chart. After that, I was testing the signals, sent by Renko, and those, provided by common technical analysis tools, like MACD and moving averages, on different cryptocurrency pairs. I analyze four-hour timeframe in my experiment. Finally, after one week of tests, I can draw the following conclusions: • The quality of Renko signals mostly depends on the right box size. • MACD oscillator is quite good to find out the appropriate box size. You adjust the box size in the selected timeframe until there are as few false signals as possible, or there aren’t any. • As Renko chart hardly indicates the minor sideways price movements, you can reduce the periods of moving averages by a few times, so that their signals won’t be too late. • To filter false signals, sent by Renko, you also need to use candlestick chart at the same time. • A perfect buy/sell entry point is when the signals in the candlestick chart coincide with the Renko signals. An example of a perfect buy position: An example of a perfect sell position. Finally, I can conclude that Renko chart is an excellent instrument that will perfectly supplement any trading system. The drawbacks are the need to adjust the brick size to each timeframe and the time lags in signals, compared to the corresponding ones in the candlestick chart. The next chart type in my experiment will be Line Break Chart. Although it may seem complicated, it is quite simple to apply. It displays only the price moves that break through the last three closing price levels. The default number of Line settings is three, but you can change it just like the Renko box size, in order to make the chart more or less responsive. Unfortunately, I haven’t discovered the way to change the type of the levels displayed. I believe it would far more interesting to see not the closing price lines, but, rather, the highs or lows, because these movements provide the final signal to determine the trend direction. So, I really hope that someone will hear me and develop such an indicator ;)) To make it clearer for you how a Line Break Chart is built, let’s study it on a real example. There are two charts of the weekly timeframe above. The candlestick chart is on the left. The Line Break chart is on the right. I marked the analyzed zone with the green circle. You see, a long bullish candlestick emerged on July 16. It broke through the closing price levels of the three previous candlesticks (I marked close levels by numbers), and so there is a bullish bar in the Line Break chart (green). Besides, the bar’s high coincides not with the high of the Japanese candlestick, but with its closing level. As you see, in this case, the opening level of a bar in the Line Break chart is always the closing price level of the previous bar. The indicator alone sends quite simple signals. 1. A buy signal is when three consecutive bearish bars (down lines) are followed by a bullish one (an up line). 2. A sell signal is when three consecutive bullish bars (up lines) are followed by a bearish one (a down line). Here, I should mention that many Line Break chart users suggest expecting an additional bar in the signal direction, following the reversal bar (breakout). Therefore, if the pattern is not complete, and down lines are alternated with up lines, you’d better avoid trading. As known, Japanese like creating names for their patterns, and this case is no exception. For clarity, I presented the bullish pattern in the Line Break chart. I marked three bearish bars with the red circle, Japanese call it Black Shoes. The bullish bar, following three black shoes, is marked with the yellow circle. It is called Suit. A white suit means to buy, and a black suit means sell. The line in the green circle is the confirming bar, it is called Neck. Japanese say that you are to buy when the market “puts on black shoes and shows the neck in the white suit”, that is the market a kind of puts on a white bullish or a black bearish suit before it moves on)) It is important, how long is the Suit line; if it is not that long, a false breakout is likely to occur. It occurred in the first case, when the Suite was rather short. In the BTCUSD price chart above, I present an example of a sell signal (similar to the bullish one), when the market has put on a black suit. Basically, this pattern has a big flaw; by the time there is the Neck, a half or even the most of the general trend can be over. To reduce the time lag, you can cut the number of break lines. In addition to this, I suggest doing the experiment with the standard indicators, MACD and moving averages. In the Bitcoin/Dollar four-hour char above, you see that the Line Break chart sends the signal a little later. However, if there is the price sideways move (marked with the red circle), the indicator sends many false signals and is not efficient. There, MACD is of help. In case with the Line Break chart, the indicator doesn’t suggest strong volatility and indicates the sentiment rather definitely; it doesn’t feature the same in the Japanese candlestick chart. Summary: The Line (Three-Line) Break Chart is obviously worth studying and can serve as a confirming indicator of the trend reversal. Like Renko chart, Line Break can remove the noise, resulted from minor volatility during short time periods; however, it is likely to send many false during a long sideways trend inside a wide price range. Moreover, I don’t think it is right to analyze the close levels to spot the breakout, as, according to technical analysis, the more important levels during the price breakouts are the highs or lows for previous periods. To study the indicator in more detail, I’m going to test in practice, applied to different trading instruments. I will present the results of my tests, traditionally, the in the next educational post. I wish you good luck and good profits! PS. If you agree with the forecast write “+” in the comments, if you don’t agree, put “-”. If you liked the post, just write thank you, and don’t forget to share the post. It is easy for you and I will be very pleased :)
BITFINEX:BTCUSDEducation
by Hypov
1