MetaTrader 4 Tools for Drawing Stock Indices Trendlines and Stock Indices Channels
Downwards Stock Indices Trend Line MetaTrader 4 Stock Indices Trend Line Indicator
A downward stock indices trend-line is plotted above the downwards trend pattern formed by consecutive lower highs, the downwards stock indices trend-line must connect at-least two highs, with the most recent high being lower. For our stock indices downward trend examples we shall use the MetaTrader 4 technical analysis software stock indices charts to illustrate example of downward stock index trend.
Since stock index price moves downward in a zigzag manner stock indices traders normally draw a downward stock indices trend-line which shows the general downward direction of the stock index prices. In stock index trading market technical analysis, this general stock index price direction is referred to as the TREND by traders. In stock indices technical analysis definition we can define this stock indices down trend line is drawn on Stock Indices chart showing the resistance areas (bearish market direction).
A stock indices down trend occurs when the price forms series of lower highs and lower lows. Each price high is lower than previous high - lower high, & each low is lower than previous low - lower low therefore showing bearish stock index price movement.
Stock Indices Trading Down stock index trend lines gain more validity each time stock index price touches the downward stock indices trend line but doesn't penetrate the trend line. A down trend remains the general direction until this series of lower highs and lower lows is broken.
In stock indices technical analysis, An up side penetration of a stock indices down trend line is a technical buy signal, and usually the first indication that the bearish direction of stock index prices may soon reverse.
Downward Stock Indices Trend Line MetaTrader 4 Stock Indices Trend Lines Indicator
When it comes to learning how to draw and learning stock indices technical analysis of stock indices charts, you need to know that when the stock indices market is bearish it forms lower lows & lower highs forming a downwards general market direction. These are the points that are used to plot the downward stock indices trend line.
To draw this downward trend setup we use resistances and to do it correctly two resistances are needed. When stock index price touches this stock indices trend line, then we sell and place stop loss just a few pips above the sloping resistances:
How to Trade Downwards Stock Indices Trend Line
When trading with this stock indices trend line trading method, this stock indices trend line setup will show the general direction of the market as downwards therefore stock indices traders will only open short sell stock index trades. These are the levels where if stock index price retraces then these points will provide strong resistance. This is why many short sellers will wait until stock index price retraces upward and hits these retracements levels to open sell stock index trades. Indices trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.
For Example, in the above stock indices example, a trader would have opened short sell signals at the resistance1, resistance2, resistance3 and these sell stock index trades would have made a lot of trading profits with minimum amount of drawdown/retracement.
Downwards Stock Indices Channel MetaTrader 4 Channel Indicator
A stock indices downward channel is plotted by drawing a line that is parallel to the downwards stock indices trendline & then adjusting it to touch the bottoms boundary of the stock index price movement. This then forms a downward stock indices channel & as long as a price stays between these 2 channels the general stock indices market direction is intact the stock indices market direction will continue being bearish.
Trading the Downwards Stock Indices Channel
The downward stock indices channel is used by traders to show levels where it is best to take profits. Traders will take some profit once the stock index price touches the lower channel & wait for another retracement before opening a short sell stock index trading again.
Downwards Stock Indices Channels MetaTrader 4 Channels Indicator
The stock indices tools to draw these stock indices channels studies on the MetaTrader 4 stock index charts can be found on the Lines Toolbar within the MetaTrader 4 platform, to access this MT4 tool bar if it is not activated on your MetaTrader 4 Stock Indices Platform, Click in "View" Next to "File" at the top left corner of the MT4 Stock Indices Platform & click View, Then Click on the Toolbars, Then Check the Lines Toolbar by clicking on it.
Below is the screenshot of these MetaTrader 4 tools: just click on this MT4 channels drawing tool and select the point to where you want to place this stock indices channels tool on the stock index chart.
MT4 Technical Analysis Charts - Downward Stock Indices Channels
MT4 Toolbar - MetaTrader 4 Tools for Drawing Stock Indices Trend Lines & Stock Indices Channels used to obtain these trend line drawing tools is shown above, to draw these trend line setups or stock indices channels, just select the above MetaTrader 4 stock indices trend line drawing tools shown on the MetaTrader 4 software and select the two points where you want to draw the downward trend line.
This stock indices trend line stock indices strategy is one of the simplest and popular stock indices technical indicators used by traders to analyze the stock indices market stock indices trend direction.
