WHAT ARE
TREND LINES?
In an earlier article I talk about the benefit of
trading with the trend and not against the trend. Now, trend lines are lines
that are used to connect points on a particular price movement of a currency
pair. Trend lines drawn on an up-trend, is drawn to connect the bottom of an
obvious support area, to the next higher support
(in an up-trend as you know,
the price is ascending). Trend lines drawn on a down-trend connects the peak of
obvious resistance, to the next lower resistance (in a down-trend the price is descending).
Since I have explain what trend lines are let’s talk
about channels.
WHAT ARE CHANNELS?
I'm not talking about CNN, BBC, NBC MTV or any
channel. Channels on a forex trading platform is drawing two parallel lines
that make (not to make but, at least to have some kind of guiding lines) the price movement to move in between the
parallel lines ( I just hope I explain it well). Plotting a channel on an up-trend is done by drawing a line that connects an obvious lower support to
another higher support, while also drawing a parallel line from a lower
resistance to a higher resistance. Plotting a channel on a down-trend is done by
drawing a line that connects a higher resistance peak to lower resistance peak,
while also drawing a parallel line from a higher support point to a lower
support point.
May I add that this whole process of drawing trend
lines and channels is done to make profit. traders use this trend lines
and channels as profit areas and indicators. When the price movement hit the
bottom of the channel it means BUY. When
the price hits the top it means SELL.
Thank you for reading.
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