 Hi, in this video, I'm going to be talking about everything to do with trend lines. So I'll be talking about why trend lines are used by traders, how to draw trend lines, the best way to draw trend lines as well, and all the trend line strategies that traders use. So what are trend lines and how are they used? So trend lines are basically support and resistance in a trend. So they identify potential buy or sell zones within an uptrend or a downtrend. So your ability to recognize a trend line depends on your ability to recognize higher highs and higher lows or lower highs and lower lows. So what I mean by that is the market needs to be in a trend, first of all, hence the term trend line. So we see a move up, so this would be the low and this would be the high and then we see a pullback. Now a trend isn't a trend until this high is broken. So until this level here gets broken, this level here cannot be a higher low. So basically price has to break past and create a new high, so a new high in order for this to now be considered the higher low. So basically this is the pattern that we are looking for. That should put us on alert that a trend line is potentially about to be drawn. So we don't want to see anything like this, nothing like that, we can't draw a trend line there. We need to see higher highs, at least a new high made for us to be on alert and it's the same thing when we are drawing a trend in a downtrend. So first of all we need to recognize are we in a potential trend, it doesn't mean that we are in a trend because we see lower highs and lower lows, it just means that we're in a potential trend and we're projecting forward. So until prices break past here, this cannot be considered a lower high, because we need to see lower highs and lower lows in a downtrend. So with trend lines we connect higher lows or lower highs. So we need this to be confirmed by a new low for this now to be considered a lower high. So let's get rid of all of this. So once we now have in an uptrend a new high that is made, what we want to do is we want to connect the higher lows or the lower highs in a downtrend. So that would be a higher low and what we're doing is we're projecting forward. So we're waiting for price to potentially come back into an area. So we've got a low, a high and then we've got a new high. So this should be our projected zone and our projected diagonal support level, because that's basically what we're doing. We're putting a trend line on the low and then the higher low and if price does come down here, this is where we want to be a buyer. So this is the first sign we want to see price react at this level and then price go higher. So again, trend lines are pretty much used as support and resistance diagonal support and resistance whereas support and resistance is obviously horizontal and we look for a level to be supported. So we would look for support here or matter of fact, we would look for support on the second touch. It's the same thing with trend lines. We're looking for the first touch. We know that there's a higher low here. So now we're projecting to the future and we're assuming that the trend is going to continue higher and again, we would look for the same thing in a downtrend. So we got a low. This would be the high, low. We need a pullback. Again, we need price to break past and create a new low for us to now be on alert, connect the high and the lower high and then project into the future and hopefully there's an opportunity if price pulls back to this zone right here for us to get short to the downside. What you also want to see is you don't want to see a trend line that is too steep. So you don't want to see something like a trend line like this. You want a trend line is best traded at around a 45 degree angle. So at least somewhere around here. But anything maybe past the 55, 60% angle, it gets quite steep. You really want to see something between maybe the 55% angle and maybe the 30% angle as well. So let's have a look at the trend lines on and drawing trend lines on a candlestick chart. So here we have the euro US dollar currency pair on daily timeframe chart. Now we can see that prices have been in a steady uptrend prices making higher highs and higher lows. So what we first want to do is really start identifying all the possible trend lines. So let's start, for example, from here. So we had prices basically making lower low move down, move up, and this was the absolute low. Until prices break above this swing, and when I say break above, I mean just even if a candlestick above it, and it's until prices make a new high, then we are not going to go on alert. So prices need to make a new high for this area to be considered a higher low. So let's just get rid of these, all right, because prices end up making a move up and staying within this range. So if I go like this between this level here and this level here, now we don't want to draw a trend line until we see, like I said, prices make a new high and this is the new high. So now we go on alert and this becomes a higher low, right? So let's get the salt. And then what we do is we connect the lows. So remember, this hasn't happened yet. This is all we're seeing at the moment. So low, we don't know whether this is a higher low until prices make a higher high, right? So this is an indication of a trend change or a change in the trend or a possible change in the trend. Remember, we're dealing with probabilities in trading. So then what we do is project into the future and what traders do is look for a trend line bounce, trend lines and nothing should be necessarily traded on their own. You're looking for confluence, so you're looking for the trend line plus maybe some price action plus maybe an indicator if you're using or trading any indicators that show you a bullish sign. So first of all, traders drawing trend lines will connect the two lows and then prices come down into here. Now, many traders draw the trend line just as a line. I don't believe in drawing trend lines as a line or any support and resistance as a line. Trend lines and support and resistance, matter of fact, are zones. So when I'm drawing trend lines as a zone, what I would do is I will clone this line. And then what I would do is the candle of the low, identified low, the body of that candle, the lowest point of the body, that's where I will put the second line, so anywhere around here and then this area here would be the zone that would be a, I would look for for a bullish signal. So prices came within this zone, tested the lower end of the zone and then prices went higher. If you do have a parallel channel tool, if you're using TradingView or any platform, trading chart and platform that has a parallel channel tool, what you can do is connect the low and then drag it back to the body low of the low candle and that will give you a bit of a channel. And I'll get into trend channels in a bit after I've taught you about the trend lines. What you want to do is look for an area that comes into the trend line and then look for a buy entry and signal around here and as you can see prices continue to make new highs. Now what you also want to do is adjust trend lines. So the market is never perfect. We don't, in a perfect world, prices make higher highs and higher lows. Let me get a pencil. So prices would have made the perfect high, perfect low, like that and then we've got a brilliant trend line, you can draw like that, but in on the charts, the perfect line doesn't happen and this is because the markets can be an uptrend but we can also trade sideways for a while. So you might get higher highs, higher lows and then prices might do something like this for a little bit and then continue higher, maybe go sideways a little bit, go higher and so on and so forth. So what you want to do is adjust the trend lines as you go along. So I'll show you what I mean by that. So as that is now the new low, the new higher low, this has to be now adjusted. This trend line from here instead of here, this now is going to be the new low and then if prices do come back to that area in the future, that would be the area that you would be looking for because what you want to do is look for obvious trend lines. There's no point in looking for obscure trend lines. You want to look for something that's clean, something that connects the wick lows of a trend line. You're not looking for something like this where there's a lot of ambiguity, just connect the lows and adjust your trend line accordingly. So now we have this move higher here. So as prices make new highs and prices and new highs is made here and you get a pullback, so prices move sideways for a little bit and then we move higher. What we want to do is connect these higher lows here. So just also as another tip, although we had this level here as the higher low from that move previously, again it's a bit messy because you've got candle wicks in the way. So although ideally you'd want to see something like this, you do have these candle wicks here which are outside of that. So what you want to do is just make it as clean as possible. Just do it from here, the body is there and then project into the future and then see what comes. Now as I was saying before, so prices have come into this zone and if there was a bullish signal then you would try to get in on capitalized traders, what they would do is place their stop loss below the trend line and then wait for prices to potentially go higher. So as we go up, as we go higher and make new highs, this would have been put at the high, prices pulled back, prices got breached but then prices made a new high. So from here, once prices make a new high then what you do is you just adjust the trend line and then that is now your new trend line. Just because a trend line is breached doesn't mean that we've stopped being in an uptrend. So that is now the new line and if prices do come back to this area here, look for a bullish signal and that is how in case you stop there and that's how traders trade trend line bounces. Now trend lines as previously stated are support and resistance, they're diagonal support and resistance. So support and resistance just like horizontal support and resistance, you will trade these breaks as resistance. So support becomes resistance and resistance becomes support. So if prices were to break through here, traders would wait for a pullback to resistance of support breaking and failing, then becoming resistance and then trade to the downside with their stop loss above the resistance zone. So trend lines become support and resistance and they work in exactly the same way as horizontal support and resistance. So let's go through a few examples. Let's have a look on this chart. So we've got, let's look for some obvious trend lines. So let's see from here, right? So let's get this right. So let's walk our way through another trend line to the downside, right? And we'll try and find some examples of support becoming resistance and resistance becoming support at the same time. So what we have is a previous move higher. We can see higher lows being made, higher lows being made. And then now we start to see prices pullback, prices pullback, right? So prices now make a new low and why is that a new low? Because this would have been considered a higher high. Once prices break the higher high, we're either going to be entering a ranging market or a downtrend. So once prices breached this level here, this obvious level here, then where we go on alert pretty much and we wait for prices to pull back. So this is the area. And again, we can't draw a trend line until we couldn't have drawn that trend line there until prices had broken below here. Once prices had gone below this level, now this is our trend line. So let me clear the chart. So once that move happened, there would be the trend line. And that's where we would go on alert. So then again, support resistance being a zone, what you would do is clone this line and then take it to the body of the candle high or low. So now this becomes the zone that we want to be a seller. So we can see and projecting into the future prices came up into this zone, gave an engulfing candle and prices went to the downside. Now when prices came up in it again, we had this kind of pin bar type candle and then we had a break, support or resistance becoming support. Prices actually came back down into this zone here. So we got a break. Prices came down into this zone and then we had a reaction from there. And again, you can see, start to see prices do react in the future. We had a bit of buying there, prices came back, bit of selling to the downside, prices came back. But what we want to do is continue on with the trend line. So once we had identified that trend line there, we can't adjust the trend line until prices make a new low. So that would have been the low there. So until prices made a new low here, now we've got this move here. So we've got a low. Now this is a confirmed lower high, confirmed lower high there, prices pulled back. Now we can't draw, we can't adjust the trend line until prices make the new low. So once prices in real time had done this, now the trend line has to be adjusted to here. So it's clean as possible. What we're going to do is look at the highs. All right, so that, get rid of this, and get rid of some of these, it's just being awkward. There we go, come on, that's it, right. So now this becomes the trend line or trend zone. So when prices then came back up into this zone, you can see the reaction, prices did spike through, but the trend line held and then we made new lows. Once the new low was made, that now becomes the zone. And as you can see, prices came up into this zone, reacted, came up to the higher end of this zone and did react and then we break through. And if prices were to come back down, traders would look probably to this zone if they kept it on their chart as some sort of support as this has acted as resistance, resistance in the past. So again, let's look at a couple more examples. So we can look at, all right. So you can see this started off as the low, bit of a high pullback. So until prices break higher, all right, this is our move, so we've got a low. Now we can't draw the trend line until prices make a new high. So as soon as price broke above here, now we go on alert and we wait for price to come back and we can basically plot our trend line or trend zone, parallel, let's get rid of this one here. So you do it as clean as possible and then prices come back to here. So you can see when prices came up into the zone, it did have a reaction. Prices broke through. Now prices did come back up and you can see that traders, so you had this little reaction right here, prices broke through. Prices came back up into the zone and then we had a reaction to the downside and then prices came back up in. And again, as all this move is going on until prices make a new high because this was the move. So until prices breach this area here, the trend line cannot be adjusted because we're in a range and then prices make new highs. Let me just remove all drawing tools. Now what we do is instead of using the previous area, we would adjust our trend tool to the candlewick low once this new high was made and then we project and then we can see now we had a clear bounce, another bounce, break prices come back, retest the zone and then you can see prices fall away. So again, when would we adjust this trend line if prices have broken above this level here, if prices have broken above that level there and this was the absolute low, let's say that was the low or there and prices had made new highs to the upside, then we would adjust the trend line. Let's look for some more examples. Let's get rid of that drawing tools, right? So I'm trying to see in real time, all right, let's look at this one here so we can see first of all, this was low and again in real time you would look at it like this so you wouldn't have any information to the right of the chart. So you've got my high, you've got a pullback. Now until prices break above, this doesn't become a trend line or even this doesn't become an area of interest. So prices as soon as price breaks above there, we now go on alert and start putting our trend lines. There we go, parallel channel, we start to look here. Now trend lines usually as well as the angle, you want to have maybe more of a steeper angle. If you have a quite a low angle somewhere around maybe the 10, 20, what you probably are looking at is what is commonly known as a trend channel, right? So this would be a good time to talk about trend channels matter of fact. So what you want to do is basically plot your trend channel. So if you don't know what a trend channel is, it's basically a trend line from the low side, but also you have resistance to the high side, right? So in fact, let me draw a trend channel on my whiteboard. So a trend channel is where prices make kind of almost like a low shallow type of trend, right? So prices are making higher highs and higher lows, whereas before we're looking for something like this, right? Looking for maybe a steeper trend, right? A 45 degree angle, yeah? With a trend channel, prices are steadily, steadily making higher highs and higher lows. The trend channels usually have something like maybe a 10, 15 degree type of angle. Now a trend channel, what you're attempting to do is trade the buy at the lows, but also sell at the highs. So this would be resistance, right? So you're buying here and what you're attempting to do is sell here. So let's go back to the charts. So drawing a trend channel, right? We have, it starts off pretty much by identifying where the trend line is. So in this example, we have a low, we have a swing, prices come back down and again we're not on the alert that we have a trend line down here until prices break above this new high because that is our pattern, right? So as soon as prices spike above, break above, go above this high here, now we're on alert for a potential channel. Now let's delete these. For the channel tool, what you want to do is before we had, you know, we would plot the trend zone or trend line tool to the body of the low candle, right? But as this is a trend channel tool, what you want to do is look for where price is now resisting, right? So at first, we don't know resistance is resistance until you get a reaction or two touches of a level, right? Or two confirmed reactions of a level. So as prices are making new highs, right? We have no idea if that is resistance until prices touch it again and then get rejected. So at first, you're constantly adjusting your resistance end to your channel higher and higher until you do get a large reaction. So prices come up here, prices do react a little bit, it kind of breaks out and then you get a strong rejection of price down here. As a tip, what you can do when looking for channels is look for some sort of trend change. So as we were making higher highs and higher lows, you can see here and then prices made a new high here, here, right? So this would have been the last, you know, higher low. You want to probably be on alert when of the resistance once prices make a new low here. So candlewick just below the last swing. So if prices do something like this, then this is probably more likely the higher end is going to be more likely to be a resistance level. So as we're looking at a potential trend change, or when I say trend change, we could be going into a sideways market. Yes, we can continue higher like this did, but in the short term, in order for this to really change the whole trend and the whole market, you would have to at least break below this level here to be considered or this level here, matter of fact, this trend line to be considered maybe some sort of ranging market or into a downtrend. So we're still making prices are still making new highs. And what we're trying to do is just capture price from the lows and the highs. So as we continue to go forward, prices contained between this low and this high and we're steadily going higher in this channel, prices contained within the channel. And then you can see that prices when they come up here again, they do react and prices are rejected and prices contained within this level until here and then again with that trend line bounce we were talking about. So support becoming resistance, you can see that price broke and prices came back up into the zone, prices reacted to the downside. Let me get rid of this and let's look for another one, another potential channel run out. Okay, so we've got another channel potential channel here. So this is an example that we use before I'll go into another pair just to show you as well. So we've got new highs. So once prices made a new high, we now go to our trend channel tool and then we start to look for a potential change in the trend. So you can see here prices made high kind of pulled back high and then prices broke below that level there. So now what we did get is a bit of a reaction. Prices came up again tested as in the previous example. Now we also adjust trend channels in the same way that we would adjust trend lines. So prices until prices make a new high which they did right here, we can adjust the trend channel to here and as you can see projecting into the future, prices came up into the zone here, contained within the channel and then prices broke down. So let's go to another chart and see if we can find some more examples of trend channels and trend lines. This is the US dollar, Canadian dollar one hour chart. Now we have a nice trend and it looks like a trend channel as well. So if we were looking to connect the trend lines first of all, what we'd be looking for again is identifying lower highs and lower lows. So we did have this really kind of steep move but we want to start from here, remember the steeper the move, I suppose the less, the more likely it is to break. So we want to see something more like this type of angle. So what you've got is steady lows, high, well a little high there. So you're looking at steady, again this isn't a low until or this isn't considered a lower high until this is broken. So until that breaks, let's just delete that a bit, yep and then we consider this and then same way when this one breaks, we consider this one until that one breaks and we don't consider that one right but if we were connecting it from the top, we'd be looking for this low to break first. So let's get rid of all drawing tools. So that would be the one and then we would start to look for lower highs and lower lows. So parallel channel right, here we go, there's the high and we've got that one there and then back to the body of the high candle and now let's start to look for trading opportunities to the downside as we make lower highs and lower lows and as you can see prices started making the tracements back into this identified trend zone and then we just basically projecting again we got a nice touch here, we've got another touch here, we've got another touch here and then price eventually does break. Now drawing the trend channel, what we would do again is once we identify lower highs and lower lows, we adjust as we go along. So once that creates a low, then as a matter of fact, it would have been from here because we want to try and make it as clean as possible. So when I say as clean as possible as far as if you do it from there, if you look to the left, you still got wicks kind of protruding through it. So you want to make it there, there is the area that you want to make it. So in the downtrend, you're looking for buying opportunities, countertrend moves. So you can see that when prices came back down in, when prices came back down in here and as prices break through and create new lows, what you have to do is adjust your trend channel. So as prices keep going down, there were some possible opportunities. There was one right here, there was one right there and again as prices are breached to the upside as well and to the downside, you can see that there were some buying opportunities. So I do hope that helps with trend lines and trend channels. If you have any questions, email me at info at trading180.com.