Hello everybody, I am truly a beginner and would appreciate some feedback. When drawing trend lines (upward trends, downward trends, and sideway trends) we are instructed to identify at least 2 major tops or bottoms. How are they identified? Would a major top be the location where the resistance is tested at least 2 times? clarification would be appreciated, thank you
It doesn’t need to be tested twice, you just want to see a significant reaction off the level.
I’ve mocked this together quickly for you, you’ll see the top line is only touched once so I’d draw that on & as it wasn’t retested, I’d class it as a significant & strong level. As for the others, the more touches, the easier it is to see them - especially when they act as both support & resistance.
It’s a tricky subject too as it’s all relative to you & your trading style: if you’re looking for bigger moves, you could take out some of the middle lines, if you’re drilling down to a lower timeframe then those lines may help you.
Draw your lines using this style & any tops & bottoms you see between these lines are just noise from normal price movement.
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Thank you very much for the clarification, that actually makes perfect sense! I appreciate it
2 touches and extend the lines across. It’s unique from person to person.