Learn How to Draw a Trendline as a Trader

Being a crypto or forex trader requires you to know the different strategies in the market and knowing how to draw trendlines can help you become a successful trader. Trendline is what we are going to learn how to draw in this post.

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Trendline

Trendlines are very common to traders because it is what most traders usually use to determine support and resistance levels and as well to know if the market is moving in an Uptrend or Downtrend direction.

screenshot from Tradingview app

Trendlines are the universal way of trading the financial market since they can be applied in any financial market like stock, bond, crypto, forex, and others. Knowing how to draw trendlines will help you make better decisions as you will get to know when the market is in Uptrend, Downtrend, current, and future movement.

Most traders don't know how to draw trendlines some traders draw trendlines correctly, whereas some traders draw their lines to fit the candlesticks instead of drawing them correctly.

Those who draw their line to fit the candlesticks think an Uptrend is drawn along the bottom of a candle to identify the level of support, whereas an Uptrend is drawn along the top of the candle to identify the resistance levels.

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How you can draw a Trendlines

Well, for you to perfectly draw Trendlines correctly, you have to locate two main bottoms or tops and connect them. In drawing trendline you have to make use of these three simple strategies.

• Strategy 1: Zoom out your charts very well.

• Strategy 2: You will need to draw the most obvious levels on your charts.

• Strategy 3: Adjust your drawing to get the most touches on your trendline In the chart.

Range and Sideways movement
screenshot from Tradingview app

Take a look at Trendlines in action and observe the waves in the chart.

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Types

From the examples of trendlines we have seen, it means trends are of 3 different types which are;

• Uptrend
• Downtrend
• Sideways Trend

screenshot from Tradingview app

The Uptrend is known as the higher lows which is the level that forms resistance before breaking down to form support.

screenshot from Tradingview app

The downtrend is known as the lower highs which is the level that forms support before breaking up to form resistance.

The sideways is how the asset has been moving in different directions.

Now, when drawing your trendline you should know that it takes at least 2 bottoms or tops to draw a correct trendline, but takes 3 to confirm if the trend is correct.

Finally, when drawing a trendline you don't need to use force, just draw it gently, from the bottom to the top.

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Conclusion

_{A trendline is very important to draw when it comes to trading the cryptocurrency or another asset in the financial market, and this post has educated us on how to draw a trendline. Note; this post is only meant for education and not a piece of investment advice. Thanks.}