How to Draw a Indices Trend Line on a Chart

How to Draw a Indices Trendline on a Chart - How Do I Draw Indices Trend Lines on Stock Indices Charts

Principles of How to Draw a Indices Trendline on a Chart

1. Use candlestick stock charts to draw indices trend lines

2. The points used to draw a indices trend line on a stock chart are along the lows of the stock price bars in a bullish market. An upward bullish trend is defined by higher highs and higher lows.
3. The points used to draw a indices trend line on a stock chart are along the highs of the stock price bars in a bearish market. A downward bearish trend is defined by lower highs and lower lows.
4. The points used to draw indices trendlines on the stock charts are the extremes points - the high or the low indices price. These extremes are important because a close beyond the extreme chart points tells traders the trend of the indices instrument may be changing. This is an entry or an exit indices trade signal.
5. The more often a indices trendline on a stock chart is hit but it's not broken, the more powerful its trend signal.

Example 1: How to Draw a Upward Indices Trendline on a Chart

To draw an upward indices trend line on a stocks chart use two support points in a bullish up-ward trend so that to draw the upward trend line and then extend the trend line as illustrated & shown below. The upwards trendline on a stock chart will show the general direction of stock trading prices and as long as stock trading price is above this up-wards trendline then the upward trend will remain intact - bullish upward indices trend.

If prices move below the up-wards trendline which is the support level for the bullish upward indices trend then stock traders should close out all their open stock trade transactions - because this may be a indices trend reversal. In an upwards trend stock trading price should generally stay above support level which is marked by the up-wards trendline on the stock charts.

Draw a Up Indices Trend Line on a Chart in Indices Trading

How Do I Draw an Upward Indices Trend Line on a Chart - How Do I Draw a Indices Trend Line on a Chart

Example 2: How to Draw a Downward Indices Trendline on a Chart

To draw a downwards trendline on a stocks chart use two resistance points in a bearish down-ward trend so as to plot the down-ward trend line & then extend the trend line as illustrated below. The downwards trendline on a stock chart will show the general direction of stock trading prices and as long as stock trading price is below this downwards trend line then the downward indices trend will remain intact - bearish downward indices trend.

If prices move above the down-wards trend line which is the resistance area for the bearish downward trend then traders should close out all their open stock trade transactions - because this may be a indices trend reversal. In an downward indices trend stock trading price should generally stay below the resistance area which is marked by the down-ward trend line on a stock chart.

Draw a Indices Down Trend Line on a Chart in Indices Trading

How Do I Draw a Downward Indices Trend Line on a Chart - How Do I Draw a Indices Trend Line on a Chart