Upward TrendLines and Channels
An upwards trend line is drawn below the trend pattern by connecting at least two lows. This upward trend-line will draw a line that show the general direction of the price.
The diagram below shows how stock price moves when it's moving in a bullish market. The stock price will move upward forming support zones.
Since the stock market moves in a zigzag manner traders normally draw a trendline which displays the general upward direction of the price.
A up trend occurs when the stock price will form consecutive higher highs & higher lows. Each price high is higher than previous high - higher high, & each low is higher than the previous and prior low - higher low.
Up trend lines gain more validity every time stock price touches this up trend line but doesn't penetrate it. A up trend remains in place until this sequence of higher highs & higher lows is broken.
A downside penetration of an upward trend line is a trading sell trade signal, & usually the first indicator that an upwards trend might soon end.
Drawing an Upward Trend Line
When the stock trading market moves up-wards it forms higher highs & higher lows forming a bullish movement - Upward Trend. An upward trend line then can be drawn by connecting the higher lows.
To draw this upwards trendline set-up we use supports. To draw the up-ward trend line correctly 2 support zones are needed. When price touches the up-ward trend line we buy and place stop loss stock orders just a couple of pips below the upwards trend line. Diagram below shows an example of an upwards trend line.
The upward trendline setup will show the general direction of the price as bullish therefore traders will only open buy long stock trade positions as long as stock price is within this upwards trend bullish market setup & within the support areas. These support levels are the levels where if the stock price retraces then these points will offer strong supports for the price. This is why many buyers will wait til stock price retraces downwards and hits these retracements levels market the upwards trend line to open buy stock trades. Trades opened at this support levels have a high Risk : Reward Ratio with minimum drawdown.
In the above up-ward trend line stock trading setup the trader would have opened buy/long stock trades from the trading signals generated at the support1, support2, support3 and these stock trades would have made a lot of profits with minimum amount of drawdown.
Upward Stock Channel
An upward channel is plotted by plotting a line that's parallel to the upwards trend line & then adjusted to touch top boundary of the stocks price movement. This then forms an upward indices channel & as long as the stock remains in between the 2 market trend channels the bullish movement will continue moving upwards.
Trading the Stock Channel
This upwards channel is used by the online traders to show levels where it's best to take profits. Traders will book some profit once the stock price touches upper channel and wait for another retracement before opening a long buy trade again.
Trend Lines MT4 Trend Line Indicator
The MT4 Trendline Indicator drawing tools to draw these trend lines & indices channels setups on the MetaTrader 4 are located on the MetaTrader 4 drawing toolbar within the MT4 platform software, To get this MT4 tool bar if it isn't activated in your trading software, Press on "View" Next to the "File" at the left top corner of MT4 platform software and click View, Then Click in ToolBars, Then Tick "Lines Tool Bar" by pressing on it.
Shown Below is screenshot Image of the MT4 drawing tool-bar. To draw a trend-line on a stock chart click this MT4 trend line plotting tool and choose the point where you want to plot the trend-line.
This is one of learn trading analysis lesson among the many learn indices tutorials on this website located on the side navigation menu, where you'll learn how to draw trend-lines and analyze these trend-lines setups.
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