# How To Draw Indices Trend Lines and Channels on Stock Indexes Charts

Sometimes support and resistances are formed diagonally in a similar way like a staircase. This forms a indices trend which is a sustained movement in one direction either upwards or downwards.

A indices trend line depicts the points of support and resistance for the indices price, depending on the direction of the stock indexes trading market. For an upward moving stock indices market indices trend - the indices trend line will shows the points of support and for a downward moving stock indices market indices trend - the indices trend line will show the areas of resistance -indices trend lines are mainly used by many stock indexes traders to determine these resistance and support levels on stock indices charts.

A Indices Trend line is a slanting straight line that connects two or more stock indexes price points and then extends into the future to act as a level of support or resistance. There are two types of indices trend lines: **upward indices trend line** and **downward indices trend line**. Indices trading trend line is an aspect of stock indexes trading technical analysis that uses indices line studies to try and predict where the next stock indexes price move will head to. A indices trader must know how to draw and interpret stock indices signals generated by this indices trend line tool.

The basis of this stock indexes trading technical analysis is based upon the idea that stock indices markets move in trends. Indices trading trend lines are used to show three things.

- The general direction of the stock indexes trading market - up or down.
- The strength of the current indices trend - and
- Where future support and resistance will be likely located

If indices trend lines forms in a certain direction then the stock indexes trading market usually moves in that direction for a period of time until a time when this indices trend line is broken.

Drawing these indices trend lines on a stock indices chart shows the general indices trend of the stock indexes trading market which can either be upward or downward.

Below is an example of how to draw these indices trend lines on indices charts

**Tutorial:** How to Draw Upward Indices Trend Line and Trade Upward Indices Trend Move

**Tutorial: **How to Draw Indices Downward Indices Trend Line and Trade Downward Indices Trend Move

The MT4 indices trading software provides indices charting tools for drawing these indices trend lines on stock indices charts. To draw indices trend lines onto a stock indexes trading chart, stock indexes traders can use the indices trading tools provided on the MT4 indices trading software that is shown below.

To draw indices trend lines on a stock indices chart just click the Stock Indexes MT4 Draw Indices Trend Line Tools as shown above on the MT4 stock indexes trading platform technical analysis software and select **point A** where you want to start drawing the indices trend line and then **point B** where you want the indices trend line to touch. You can also right click on the indices trend line and on the **properties option** select the option to extend its **ray** by ticking the "**ray check box**", if you do not want to extend the indices trend line, then uncheck this option in your MT4 stock indexes trading platform. You can also change other indices trend line properties such as color and width on this property popup window of the indices trend line properties. You can download MT4 software and learn indices trend line technical analysis with it.

**The indices trend is your friend**. Is a popular saying among investors because you should never go against it. This is the most reliable method to trade Indices because once stock indices prices start to move in one direction they can move in that particular direction for quite some time - therefore using this indices trend trading method presents opportunity to make profits from the stock indexes trading market.

## Principles of How to Draw Indices Trend Lines

Use candlestick indices charts

- The points used to draw the indices trendline are along the
**lows of the stock indexes price bars in a rising stock indices market**. An upward bullish indices trend move is defined by higher highs and higher lows. - The points used to draw the indices trend line are along the
**highs of the stock indexes price bars in a falling market**. A downward bearish indices trend move is defined by lower highs and lower lows. - The points used to draw indices trend lines are extremes points - the high or the low indices price. These extremes are important because a close beyond the extreme tells investors the indices trend of the indices trading instrument might be changing. This is an entry or an exit signal.
- The more often a indices trend line is hit but not broken, the more powerful its signal.

There are two main ways of trading this indices trend line technical analysis setup:

**The Indices Trend Line Bounce - Indices Trend Line Bounce****The Indices Trend Line Break - Indices Trend Line Break**

### Technical Analysis Methods of Indices Trend Lines

**The indices trend line bounce** is a continuation stock indices signal where stock indexes price bounces off this indices trend line to continue moving in the same direction. In a downward indices trend, the stock indexes trading market will bounce downwards after hitting this indices trend line level which is the resistance level. In an upward indices trend, the stock indexes trading market will bounce upwards after hitting this indices trend line level which is the support level.

**The indices trend line break** is a reversal stock indices signal where the stock indexes trading market goes through the indices trend line and starts moving in the opposite direction. When a up indices trend is broken then the sentiment of the stock indexes trading market reverses and becomes bearish and when a down indices trend is broken then the stock indexes trading market sentiment reverses and becomes bullish.

For very strong indices trends, after this indices trend line break signal, the stock indexes price will consolidate for some time before moving in the opposite direction. For short term indices trends then this indices trend line break stock indices signal will mean stock indexes price may reverse immediately.

In indices trading, both the indices trend line bounce and the indices trend line break that are used in technical analysis charts are based upon these indices trend line levels being support and resistance levels.

### Entry, Exit and Setting stops:

This indices trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these indices trend lines. The indices trend line bounce is a low-risk entry method used by stock indexes traders to place entry trades after stock indexes price has retraced. Indices trades are setup along these indices trend line levels and a stop loss placed just above or below these indices trend lines.

The indices trend line break is a crucial indicator of possible indices trend reversal. When the indices trend line is broken the stock indexes price starts move in the opposite direction. This provides an early exit signal for stock indexes traders to exit their open trades and take profits. When there a penetration of these indices trend line levels, it is a signal that the stock indexes price can start moving in the opposite direction.

Unlike other stock indexes trading technical analysis indicators there is no formula used to calculate the indices trend line, this indices trend line formation is just drawn between two chart points on the stock indexes trading chart.