If you want to be a serious and successful trader, knowing how to plot trend lines onto your trading chart is something you absolutely need to master. These lines allow you to identify a trend with a high degree of precision, which means you will always be perfectly prepared to make the right business move. In the following few paragraphs, we will show you the basics you need to know when it comes to this important trading tool. There are several types of lines you need to be aware of, so read on and learn all about them, especially if you’re still new to this type of trading. Let’s go!
Trend lines | Two main types
Just like there are two types of trends, there are also two main types of trend lines – the uptrend (bullish) line and the downtrend (bearish) line. The former are constructed by finding the lowest point a price reaches and then the next higher low and so on. Once you connect all these lows, you will get a straight uptrend line that will show you what to expect in the future. The same principle applies to bearish lines, only you have to find the highest high here and then connect it to the next lower high on your chart. But what do you do once you have these two lines? Well, we’ll analyze that in the following paragraph, so stay with us!
Trend lines | Resistance and support
The most important concept trend lines can help you with is the concept of resistance and support. You see, if you plot highs and lows with these lines on the same Binary Options Chart, you will create a corridor in which your price is very likely to remain in the foreseeable future. The stronger the Binary Options Trend is, the bigger the chance for this corridor to maintain its viability. However, for determining support and resistance levels, you don’t necessarily need more than one point – you can simply find the highest high and/or the lowest low and then create a horizontal line going through one of these points. You will also want to determine how long a price will go without breaking these lines and how many times it touches them, but again without breaking them. The longer the time period and the more times the price touches these line, the stronger the indication is.
Trend lines | Conclusion
Trend lines are something all traders need to be familiar with if they want to achieve success on the market. They help you determine where a price is heading and how strong the trend you’re monitoring is. Creating a corridor with these lines will usually give you a very good idea of what to expect and show you which levels a price is unlikely to break. If you want more useful tips like this, stay on our website and browse around. There are many more educational articles here.