Downward Indices Trend Lines and Channels

Downward Indices Trend Line MT4 Indices Trend Line Indicator

A downward indices trend line is drawn above the downward indices trend pattern formed by consecutive lower highs, the downward indices trend line must connect at least two highs, with the most recent high being lower. For our downward indices trend examples we shall use the MT4 technical analysis software stock indices charts to illustrate an example of downward indices trend.

Since stock indices price moves down in a zigzag manner indices traders normally draw a downward indices trend line which shows the general downward direction of the stock indices prices. In stock indices market technical analysis, this general stock indices price direction is referred to as the TREND by stock indices traders. In stock indices technical analysis definition we can define this indices trading down trend line is drawn on a Indices chart showing the resistance levels (bearish market direction).

A indices trading down trend occurs when the stock indices price makes a series of lower highs and lower lows. Each high is lower than the previous high - lower high, and each low is lower than the previous low - lower low therefore showing bearish stock indices price movement.

Indices Down indices trend lines gain more validity each time stock indices price touches the downward indices trend line but does not penetrate the indices trend line. A indices trading down trend remains the general direction until this series of lower highs and lower lows is broken.

In stock indices technical analysis, An upside penetration of a indices trading down trend line is a technical buy indices trading signal, and usually the first indication that the bearish direction of stock indices prices may soon reverse.

Downward Indices Trend Line MT4 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 trading market is bearish it forms lower lows and lower highs forming a downward general market direction. These are the points that are used to draw the downward indices trend line.

To draw this downward indices trend setup we use resistances and to do it correctly two resistances are needed. When stock indices price touches this indices trend line, then we sell and place stop loss just a few pips above the sloping resistances;

Trading This Downward Indices Trend Market Move

When trading with this indices trend line trading method, this indices trend line setup will show the general direction of the stock indices trading market as downwards therefore indices traders will only open short sell stock indices trades. These are the levels where if stock indices price retraces then these points will provide strong resistance. This is why many short sellers will wait until stock indices price retraces upwards and hits these retracements levels to open sell stock indices trades. Indices trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.

For Example, in the above indices trading example, a indices trader would have opened short sell indices trading signals at the resistance1, resistance2, resistance3 and these sell stock indices trades would have made a lot of profits with minimum amount of draw-down/retracement.

Downward Indices Channel MT4 Channel Indicator

A indices downward channel is drawn by drawing a line that is parallel to the downward indices trend line and then adjusting it to touch the bottom boundary of the stock indices price movement. This then forms a downward indices channel and as long as the stock indices price stays between these two channels the general stock indices market direction is intact the stock indices trading market direction will continue being bearish.

Trading the Downward Stock Indices Channel

The downward indices channel is used by stock indices traders to show levels where it is best to take profits. Traders will take some profit once the stock indices price touches the lower channel and wait for another retracement before opening a short sell indices trade again.

MT4 Tools for Drawing Indices Channels

The indices trading tools to draw these indices channels studies on the MT4 stock indices charts are located on the Lines Toolbar within the MT4 platform, to access this MetaTrader 4 tool bar if it is not activated on your MT4 Indices Trading Platform, Click in "View" Next to "File" at the top left corner of the MT4 Indices Trading Platform and click View, Then Click on Tool bars, Then Check the Lines Toolbar by clicking on it.

Below is the screenshot of these MT4 tools: just click on this MetaTrader 4 channels drawing tool and select the point to where you want to place this indices channels tool on the stock indices chart.

MT4 Technical Analysis Charts - Downward Indices Channels

MT4 Toolbar - MT4 Tools for Drawing Indices Trend Lines and Indices Channels used to obtain these indices trend line drawing tools is shown above, to draw these indices trend line setups or indices channels, just select the above MT4 indices trend line drawing tools shown on the MT4 software and select the two points where you want to draw the downward indices trend line.

This indices trend line indices trading strategy is one of the simplest and popular indices technical indicators used by stock indices traders to analyze the stock indices trading market indices trend direction.