Upward Stocks Trend Lines and Channels
An upward stocks trend line is drawn below the stocks trend pattern by connecting at least two lows. This upward stocks trend line will draw a line that show the general direction of the stocks market.
The diagram below shows how stocks price moves when it is moving in a bullish market. The stocks price will move upward forming support levels.
Since the stocks market moves in a zigzag manner stocks traders normally draw a stocks trend line which shows the general upwards direction of the stocks market.
A stocks up trend occurs when the fore stocks price will continue to form consecutive higher highs and higher lows. Each price high being higher than the previous high - higher high , and each low is higher than the previous low - higher low.
Stocks Trading Up stock trading trend lines gain more validity each time stocks price touches this upward trend line but does not penetrate it. A up trend remains in place until this series of higher highs and higher lows is broken.
A downside penetration of an upward stocks trend line is a technical sell signal, and usually the first indication that an upward stocks trend may soon end.
Drawing an Upward Stocks Trend Line
When the stocks market moves up it forms higher highs and higher lows forming a bullish market movement - Upward Stocks Trend. An upward stocks trend line can then be drawn by connecting these higher lows.
To draw this upward trend line setup we use supports. To draw the upward trend line correctly two support levels are needed. When stocks price touches the upward trend line we buy and place stop loss orders just a few pips below the upward trend line. The diagram below shows an example of an upward stocks trend line.
The stocks upward trend line setup will show the general direction of the stocks market as bullish therefore stocks traders will only open buy long stock trades as long as price is within this upward trend bullish market setup and within the support levels. These support levels are the levels where if the stocks market retraces then these points will provide strong supports for the stocks price. This is why many stocks buyers will wait until stocks price retraces downwards and hits these retracements levels market the upward trend line to open buy stock trades. Stocks trades opened at this support levels have a high Risk to Reward Ratio with minimum draw down.
In the above upward stocks trend line stocks setup the stocks trader would have opened buy/long stock trades from the signals generated at the support1, support2, support3 and these stock trades would have made a lot of profits with minimum amount of draw-down/retracement.
Upward Stocks Trading Channel
An upward stocks channel is drawn by drawing a line that is parallel to the upward trend line and then adjusted to touch the top boundary of the stocks price movement. This then forms an upward stocks channel and as long as the price stays between these two channels the bullish upward market movement will continue moving up.
Trading The Stocks Trading Channel
This upward stocks channel is used by traders to show levels where it is best to take profits. Traders will take some profit once the stocks price touches the upper channel and wait for another retracement before opening a long buy stocks trading again.
MetaTrader 4 Tools For Drawing Stocks Trend Lines and Channels
The Stocks Trading MetaTrader 4 Trend Line Indicator drawing tools to draw these trend lines and stocks channels setups on the MT4 are located on the MetaTrader 4 drawing tool bar within the MetaTrader 4 stock platform, To get this MT4 tool bar if it is not activated on your stocks platform, Click in "View" Next to "File" at the top left corner of the MT4 stock platform and click View, Then Click on Tool bars, Then Check the "Lines Toolbar" by clicking on it.
Below is the screenshot Image of the MT4 drawing tool bar. To draw a stocks trend line on a stocks chart just click on this MT4 stocks trend line drawing tool and select the point where you want to draw the trend line.
This is one of the learn stocks technical analysis lesson among the many learn stocks tutorials on this website located on the side navigation menu, where you will learn how to draw stocks trend lines and analyze these trend lines setups.
