The construction of trend lines

 

 

The trend is a price movement is oriented in a certain direction. One of the misconceptions is that the price can only rise or decline, but most of the time the currency pair traded in a skinny price ranges. Therefore, the right to distribute the trend in three types:

1. A \"bottom-up\" (or bullish) - during this period, the price increases (the definition of a bullish trend came from the comparison with the bull, raising the horns production);

2. \"Top-down\" (or bear) - in this period the price falls (definition of bearish trend came from the comparison with the bear, which the whole body stands on the price);

3. \"Side\" (or flat) - the price moves in a narrow range. In most cases, market consolidation occurs before the beginning of rapid growth or significant fall in prices.

Therefore, before technical analyst have two tasks:

- to identify the trend using trend indicators and the channel line or trend.

- to identify the strength of the trend in this well help oscillators and graphical models.

Line of the channel.

Line channel is a line drawn parallel to the trend line. Built it so that price fluctuations were within the range between the trend line and the line of the channel. The direction of the channel up, sideways or down indicates a trend of the market. If the price is between the lines of the channel, respectively, it is possible to speak about presence of downward, upward or horizontal channel, in accordance with the, where is the line. In this case, the chances to get profit significantly increase as the opening positions when the price rebound from the trend line is a great option for entry into the market, while the close position is recommended when approaching rates to the channel line. This trading strategy will allow you to get the maximum profit. 

Often used line of the channel as a pointer to lock in profit or loss. In an ascending channel order Take Profit is set below the upper line, and the Stop Loss order under the bottom. If the channel is down, Take Profit orders should be placed above the bottom line, and the Stop Loss order is over the top.

In that case, if prices have not reached the upper line of the bullish channel or the bottom line of the bearish channel, this indicates a weakness in the current trend.

Watch the video: As postoil channel on charts

Remember that the profitability of trade is highly dependent on your chosen broker!