How to use Trend Lines and Channels to Trade! 📈

Using Trend lines and Channels. http://www.financial-spread-betting.com/course/trendlines.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Spotting trend and Channels.
There’s another way that you can include lines on your charts to help you figure out when to trade. You know about support and resistance levels, and these are represented by horizontal lines positioned at price turning points or reversals. But you can also use lines that slope in the direction of the market, and these are called trend lines.

When you have a trend, whether an uptrend or a downtrend, support and resistance levels are of marginal use. In an uptrend, you may find a resistance level is broken by the price going up then the price will retrace back down to the same level and find support before resuming a trend – but that’s about it. On the other hand, trend lines are sloped either up or down, depending on the trend, and may provide support/resistance many times during the trend.

Taking an uptrend for the first example, a trend line may be drawn sloping upwards, and connecting (roughly) the lowest price points touched as the price increases. As you can see from any chart, the price will never go up in a straight line but will always go up and down a little as it creeps up. The trend line connects those low points.

Finding and drawing a trend line is very subjective, and may not always be possible. But often you can draw a straight line that more or less connects several points, and provided the trend continues you will often find that this gives support every time the price comes back down. It’s worth looking at a few charts and practising so that you can see how this works.

Traders also draw what is called a channel. This is a sloping line drawn parallel to the trend line, but slid up to be over the top of the prices. Again, we are looking to connect many peaks of the price chart. Then with a well behaved price, you will find it oscillates in the channel formed by the two lines as it generally increases.

With a downtrend, the trend line is usually drawn first, sloping downward and connecting the successively lower price peaks, that is on top of all the price movements. Then the channel line can be drawn underneath the reducing prices. Again the principle is that the price will tend to remain between the two lines in the channel so formed.

You will find that some charts behave better than others when you’re trying to locate trend lines and channel lines. It won’t always be possible to draw straight lines connecting the points, but if you can it is a useful tool to help in your trading. Try not to be too accurate, but to look at the overall picture and figure out a commonsense solution.

Finally, just as you can see price movements gathering at the channel lines and being rebuffed, you may also see some price hesitation when the price passes over the middle between the two channel lines. Although it’s not strictly drawn as part of the channel, many traders like to draw this third parallel line half way between the two lines to give a visual indication of possible price actions.

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