EURUSD 1.1856 USDJPY 111.62 USDCAD 1.2373 EURCZK 26.031 USDCZK 21.951 EURPLN 4.2727 USDPLN 3.6043
EURUSD 1.1856 USDJPY 111.62 USDCAD 1.2373 EURCZK 26.031 USDCZK 21.951 EURPLN 4.2727 USDPLN 3.6043

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Demo account in MetaTrader 4

Demo account in MetaTrader 4

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For beginners

For beginners

Learn the basics of financial markets

Trendlines are the most basic tools that allow one to identify an actual market tendency and possible moments of its reversal

Rule of thumb

Trendlines not only provide hints to the general direction in which the market is going, but also the information on the possible resistance and support levels.

Among the trendline formations, the ascending, descending and horizontal formations can be distinguished.

 

Ascending trendlines

Ascending trendlines are usually identified, by connecting with  straight line local market minimums, with each of them located at a higher position than the previous one. In the case of a candlestick chart, the lower shadows of the candles are connected. Ascending trendlines are used to identify an upward trend.

 

trendline, ascending

 

Descending trendline

Descending trendlines are used to identify a downward trend by connecting with a straight line a set of local maximus, each of them placed lower than the previous one. The line connects the highs of bar charts or the higher shadows in  a candlestick chart.

 

descending, trendline

 

Horizontal trendline

Horizontal trendlines may be divided into upper (resistance) or lower (support) trendlines. These two trendlines are important to identify continuation or the reversal of trends. Support lines are usually defined as a level where the interest in buying an asset is strong enough to overcome the pressure to sell that asset.

 

horizontal, trendline

 

Often, this is observable with an alternating rise and fall in prices without going lower than the support line, at least in a certain period of time. The same can be observed with the resistance line which applies to the maximum values. 

 

These two lines - support and resistance, are the base for the first formation called horizontal channel.

 

How to use it with MetaTrader 5:

  • Trendlines can be plotted on a chart by using  “Draw trendline” or “Horizontal line” tools.
  • The “Draw trendline” option is available directly through clicking an icon or
  • choosing the “Insert/Object” option form the menu.

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