The trend line, seemingly a simple straight line, is a 'stumbling block' for countless traders.
Many people have drawn countless times but still can't understand: should we connect the wicks or the bodies? When should we follow the trend?
What does the most basic trend line look like?
A trend line is a straight line drawn on a candlestick chart that shows the direction of market movement; it can help us see the overall trend of the market and is a very simple and practical technical tool.
An ascending trend line is a straight line connecting two or more gradually higher lows.
The descending trend line is a straight line connecting two or more gradually lower highs.
In simple terms: connect the lows for a bullish view, connect the highs for a bearish view.
How to draw a trend line
There is no unified standard for drawing trend lines; there are several different methods among traders.
Several technical points that people usually struggle with, such as:
How to choose the starting point of the trend line?
2. When we connect, do we connect from the wicks of the candlesticks or from the bodies of the candlesticks?
3. Can we cross the price while connecting?
Properly adjust the points chosen for drawing the trend line so that it closely fits more price corrections.
Practical trading strategies for trend lines
Let me explain a practical trading strategy for trend lines, used in conjunction with the RSI indicator.
When the RSI indicator enters the 30 area, it indicates that the market is oversold; draw a descending trend line and wait for a breakout to go long.
When the RSI indicator enters the 70 area, it indicates that the market is overbought; draw an ascending trend line and wait for a breakdown to go short.
The trend line, seemingly just a straight line, allows you to see the rhythm of the market.
Once you master the drawing and usage, it's like gaining a pair of 'eyes to see the patterns of the market.'
But remember, the trend line is not a万能钥匙 (universal key); real profits come from our own patience, discipline, and execution.
