In the education part under “Trendlines”. it is stated that"
1.Uptrend (higher lows)
2.Downtrend (lower highs)
Why is it so to draw an uptrend on higher lows and not on higher highs?
Can the same thing also be said about a downtrend. Can a downtrend be drawn on lower lows instead on lower highs?
Personally I don’t think there is a wrong way to draw a trendline, it just depends on what you want to validate. Today, i might draw an upward trendline on higher high as well as higher low and tomorrow I could just draw it on higher low or higher high alone. There is no wrong way because by mere looking at the price movement, you could just identify a trend. Trendline drawing is just other tools to play around with.
You can draw everything according to your own assumption; particularly in your learning session!
Bullish trendlines should be below the majority of the price action. The idea is that the line acts as dynamic support level of price so as price falls to the line it has a better than 50% probability of rebounding upwards. If the line is drawn at the top of the recent candles or closing price line, how will that tell you where a rebound is likely to start?
The only time an bullish trendline can be drawn to meet the highs of price action is when you are drawing in the higher boundary of a trend channel, but in that case you must still have already drawn the lower line in first - without a trend you cannot have a trend channel.
“1.Uptrend (higher lows)
2.Downtrend (lower highs)
Why is it so to draw an uptrend on higher lows and not on higher highs?
Can the same thing also be said about a downtrend. Can a downtrend be drawn on lower lows instead on lower highs?”
You can draw an uptrend using higher lows and a downtrend using lower highs as long as rules 1 and 2 are there, otherwise it would be considered a chart pattern, not a trend. Or As Tommor mentioned, a channel up or down.
For example, if you had higher lows but you also had lower highs, that would be a symmetrical triangle, or a pennant. If you had lower highs but you had price bouncing back up off the same price (support) over a period of time you would have an ascending triangle as opposed to a downtrend.
Here’s an example of a long term channel down that has turned into an ascending triangle:
Here’s a Pattern chart that helped me when I started. This might help if your strategy uses chart patterns:
This is why I am here, to learn from others. Thank you for sharing the FOREX CHART PATTERNS. I need to look at this everyday.
Usually when you have a down trend you can draw a channel.
And technically you don’t need to draw the channel, just the outer trend-line, unless you want to trade reversal count trend setups (which is considered an aggressive approach)
Thanks, all great stuff.
I will print out the Forex charts!!
I like that forex chart patterns sheet , cant have enough of them !
