1- What is a trend line?
Trend lines are easily recognizable lines that traders draw on charts to connect a series of prices or show the best fit of some data. The resulting line is then used to give the trader a good idea of the direction in which the value of an investment could move.
A trend line is a line drawn above the pivot highs or pivot lows to show the prevailing price direction. Trend lines are a visual representation of support and resistance in any time period. They show the direction and velocity of the price and also describe patterns during periods of price contraction.
Trend lines indicate the best fit of certain data using a single line or curve.
A single trend line can be applied to a chart to give a clearer picture of the trend.
Trend lines have the ability to exercise to the highs and lows to produce a channel.
The length of time that is examined and the precise aspects used to produce a trend line vary from trader to trader.
What do the trend lines tell you?
The trend line is among the most important tools used by technical analysts. Rather than looking at past trading performance or other fundamentals, technical analysts look for trends in price action. A trend line helps technical analysts determine the current direction of market prices. Technical analysts believe that the trend is their friend, and identifying this trend is the first step in the process of making a good trade.
To create a trend line, an analyst must have at least two points on a price chart. Some analysts like to use different time frames, such as one minute or five minutes. Others look at daily charts or weekly charts. Some analysts set aside time entirely and choose to view trends based on tick intervals rather than time intervals. What makes trend lines so universal in use and attractive is that they can be used to help identify trends regardless of the time period, time frame or interval used.
The difference between trend lines and channels
Much more than one trend line can be used on a chart. Traders commonly use a trend line connecting highs across one span and another to connect lows to produce channels. A channel adds a visual representation of support and resistance for the time frame under review. Similar to a single trend line, traders look for a spike or dissolution to pull the cost action out of the channel. They have the ability to use that gap as an exit point or an entry point depending on how they are setting up their business.
Trend lines have constraints shared by each of the charting instruments in that they have to readjust as more cost data is entered. A trend line will sometimes last a long time, but occasionally the cost action will deviate enough that it is essential to update it. Additionally, merchants are constantly choosing different data points of view to connect with. For example, certain traders will use the lowest lows, while others will only be able to use the lowest closing costs over a period of time. In the end, trend lines applied over smaller time frames have the potential to be volume susceptible. A trend line formed at low volume can easily be broken while increasing volume during a session.
2- Line Information
This is used to collect data on a trend, be it bearish or bullish.
- Angle
- Bars
- Percentage of Raise or Lower.
3- Angle of a trend.
It is placed from the maximum or minimum point to the end of the same trend, be it bearish or bullish, in general a logarithmic graph is used to better visualize the development of the asset. Compared to previous trends.
4- VWAP (Volume weighted average price).
Volume Weighted Average Cost (VWAP) is a technical study instrument used to measure volume weighted average cost. The VWAP is typically used with intraday charts as a way to establish the general direction of intraday costs. It is similar to a moving average in that once cost is above VWAP, costs keep going up and once cost is below VWAP, costs keep falling. VWAP is used primarily by technical analysts to detect market trends.
Calculation
There are five steps in calculating VWAP:
Calculate the typical price for the period.
High + Low + Close / 3
Multiply the typical price by the volume for the period.
(Typical Price x Volume)
Create a typical price running total.
Cumulative (typical price x volume)
Create a running total for volume.
Cumulative (volume)
Divide the running totals.
VWAP = cumulative (typical price x volume) / cumulative (volume)
Basic Explanation:
The volume-weighted average cost indicator is similar to a moving average in that once costs advance, they remain above the indicator line and once they remain decreasing, they remain below the indicator line. However, keep in mind that, like a moving average, VWAP may also experience lag. The lag is inherent in the indicator since it is a calculation of an average using previous data.
VWAP can be used in any time frame: intraday (seconds, min, hours), week, month, year, decade, century. For example, if you select a weekly interval, the sum of the values will accumulate from the first trading day of each week.
Identification of trends
Identifying trends is a critical benefit of using the volume weighted average cost indicator. The hypothesis is quite easy however it could be quite effective, especially once it is used to confirm trading signals.
The uptrend is characterized by costs that trade above the VWAP.
The downtrend is the opposite.
Summary
The volume weighted average cost is an interesting indicator because, unlike many other technical study tools, it is the most correct for intraday study. It is a robust way to detect the underlying trend of an intraday lapse. Once the cost is above the VWAP, the trend increases and once it is below the VWAP, the trend decreases. However, there is a problem. Despite being used primarily on a day-to-day basis, there can still be a huge difference between the indicator and the cost. The indicator starts calculating when opening and stops calculating when closing. Therefore, for a chart that uses a short time span (that is, 1 minute), there may be several hundred periods in that single day. The closer you are to the close of the day, the longer the indicator will delay. In other words, true of any indicator that calculates an average using previous data.
Tickets:
Anchor period
Indicator calculation period. Probable values: session, week, month, year, decade, century.
Offset
Modifying this number will move the VWAP forward or backward, relative to the current market. Zero is the stated cost.
Style:
VWAP
You can toggle the visibility of the VWAP, as well as the visibility of a cost line that shows today's actual cost of the VWAP. Also, you can choose the color, thickness, and line style of the VWAP line.
Precision
Establish the number of decimal places that will be left in the cost of the indicator prior to rounding. The larger this number, the more decimal places will be in the cost of the indicator.
5- Horizontal Line
It is used to indicate a possible support or resistance, at a specific price.
6- Vertical Line
It is used to indicate a date or a price range between assets starting from a certain candle.
7- Crossing Line.
It is used for both Horizontal and Vertical data. Support-Resistance or Range from a certain date or price.
8- Arrow
This serves to indicate a certain moment or a beginning, a direction and finally an end of it.
9- SemiDirect Line.
It is used to see possible supports or resistances in the form of a channel exerting z in coordinates.
10- Direct Line.
Same meaning as Semi-direct taking part also to the previous part.
11- Channels.
The channel is a powerful yet commonly overlooked chart boss and combines some forms of technical study to give traders potential aspects of entering and exiting trades, as well as hazard control. The first step is to learn to detect channels. The next steps integrate establishing where and when to enter a trade, where to put stop-loss directives, and where to profit.
Channel characteristics
In the context of technical analysis, a channel occurs when the price of an asset moves between two parallel trend lines. The upper trend line connects the swing highs of the price, while the lower trend line connects the swing lows.
The channel can slope up, down, or sideways on the chart.
If the price breaks out of a trading channel to the upside, the move could indicate that the price will rebound further.
The trade channel technique consistently works best in trades with medium volatility, which could be critical in deciding the likely profit ratio of a trade. For example, if volatility is low, then the channel is not going to be huge enough, which means lower potential gains. Larger channels are usually associated with higher volatility, which means higher potential returns.
Channel types
A channel consists of at least 4 contact aspects as we require at least 2 minimums to connect with each other and 2 elevated ones to connect with each other. Generally, there are 3 types:
Channels that remain angled upward are called ascending channels.
Channels that angle downward are downward channels. The ascending and descending channels are also called trend channels as the cost moves more dominatingly in one direction.
Channels in which the trend lines are horizontal are called horizontal channels, trading ranges, or rectangles.
Buy or shorten the channel
Channels sometimes have the ability to grant buying and trading aspects and there are numerous rules for entering long or short positions:
Once the cost reaches the pre-eminent part of the channel, sell your existing extensive stance and / or take a short stance.
Once the cost is in the middle of the channel, do nothing if you do not have operations or if you keep your recent operations.
Once the cost hits the bottom of the channel, cover your existing short stance and / or take a long stance.
There are two exceptions to these rules:
If the cost goes through the top or bottom part of the channel, then the channel is not intact at the moment. Don't start any more trading until a new channel is developed.
If the cost shifts between the channels over a long period of time, a new, narrower channel can be established. At this point, enter or exit around the ends of the narrower channel.
Other ways of engineering are sometimes used to improve the accuracy of channel signals and to check the overall strength of the up or down shift. Several other tools to use throughout the channel business include:
What's more...
Moving Average Convergence Divergence (MACD) is commonly going to be close to zero along horizontal channels. The MACD line that crosses the signal line can also signal likely longs around the bottom of a channel or short trades around the prominent part of the channel.
A stochastic crossover can also indicate a buying possibility around the bottom of the channel or a trading possibility around the leading part.
The volume can also support commercial channels. The volume is often lower on the channels, especially around the middle of the channel. Shoots are constantly associated with a large volume. If the volume is not increased by one separation, there is a greater possibility that the channel will continue.
Determination of Stop Loss and Take-Profit levels
Channels have the ability to provide integrated money management skills in the form of stop-loss and take-profit levels. Here are the main rules to decide these aspects:
If you have bought at the bottom of the channel, exit and take your profit in the leading part of the channel, but also place a stop-loss order subtly below the bottom of the channel, which leaves room for regular volatility.
Determination of commercial reliability
The channels provide the function of establishing the possibility of success of an operation. This is done through something known as confirmations. Confirmations represent the proportion of times the cost has been recovered from the top or bottom of the channel. These are the relevant assertion levels that you should remember:
1-2: Weak channel (Non-negotiable)
3-4: Correct channel (Negotiable)
5-6: Deep Channel (Reliable)
6+: Fairly intense channel (Most reliable)
This only applies to traditional markets in general.
Estimation of the duration of the operation
The proportion of time it takes for an operation to reach a point of sale from a point of purchase can also be calculated using channels. This is done by recording the proportion of time it took for operations to run in the past and then averaging the proportion of time for the future. This estimate is based on the assumption that cost movements are approximately equivalent in terms of time and cost. However, it is only an estimate and may not always be strict.
Channels provide a way to buy and sell when price moves between trend lines. By "encapsulating" a stock's price movement with two parallel lines, buy and sell signals, as well as stop-loss and target levels, can be estimated. The duration of the channel helps determine the strength of the channel. The amount of time it typically takes for a price to move from high to low (or low to high) provides an estimate of how long trades can take.
12- Upper or lower plane
This type of graph is used for patterns such as Ascending Triangle or Descending Triangle. Which we will explain later. But the base is simple. A flat resistance or support along with a continuation of the trend. With a break.
13- Trend Regression.
Regression trends have the ability to use parallel channels in a similar way. The primary difference is that there are preeminent and lower bands that are set to a customer-determined number of standard deviations from a baseline. This is a good tool for establishing when a cost is unusually far from its baseline.
Preeminent deviation
Sets the number of standard deviations from the base to configure the preeminent channel. Fundamentally, this institutes the distance between the central base and the edge of the preeminent canal.
Lowest deviation
Sets the number of standard deviations from the base to configure the lower channel. Fundamentally, this institutes the distance between the central base and the edge of the lower canal.
Use preeminent deviation
Toggles the utilization / visibility of the preeminent channel.
Use a lower deviation
Toggles the use / visibility of the lower channel.
Source
Sets the source of costs to calculate channel posture.
Style
In the Style characteristics dialog box, it is feasible to modify the appearance of a regression trend.
Base
Sets the color, weight, and line style for the bottom channel and bottom line. The check box next to it toggles the visibility of the baseline.
Up
Sets the color, weight, and line style of the preeminent channel, as well as the weight and line style of its border. The check box next to it toggles the visibility of the preeminent channel.
Down
Sets the color, weight, and line style of the bottom channel, as well as the weight and line style of its border. The check box next to it toggles the visibility of the lower channel.
R
This check box toggles the visibility of the writing showing the cost of Pearson's correlation coefficient between both aspects of the regression trend.
Extend lines
Toggles the choice of lengthening the channel lines indefinitely to the right, even once it is out of the present chart view.
Coordinates
In the Coordinates characteristics dialog box, you can accurately position the views of the regression trend on the time axis by setting the bar number.
Point 1 bar
It enables the rigorous location of the first point of the regression trend using a bar number.
Point 2 bar
It enables the rigorous location of the second point of the regression trend using a bar number.
Visibility
In the Visibility Characteristics dialog box, you can modify the regression trend that is displayed in charts of different time periods.
Trend lines are easily recognizable lines that traders draw on charts to connect a series of prices or show the best fit of some data. The resulting line is then used to give the trader a good idea of the direction in which the value of an investment could move.
A trend line is a line drawn above the pivot highs or pivot lows to show the prevailing price direction. Trend lines are a visual representation of support and resistance in any time period. They show the direction and velocity of the price and also describe patterns during periods of price contraction.
Trend lines indicate the best fit of certain data using a single line or curve.
A single trend line can be applied to a chart to give a clearer picture of the trend.
Trend lines have the ability to exercise to the highs and lows to produce a channel.
The length of time that is examined and the precise aspects used to produce a trend line vary from trader to trader.
What do the trend lines tell you?
The trend line is among the most important tools used by technical analysts. Rather than looking at past trading performance or other fundamentals, technical analysts look for trends in price action. A trend line helps technical analysts determine the current direction of market prices. Technical analysts believe that the trend is their friend, and identifying this trend is the first step in the process of making a good trade.
To create a trend line, an analyst must have at least two points on a price chart. Some analysts like to use different time frames, such as one minute or five minutes. Others look at daily charts or weekly charts. Some analysts set aside time entirely and choose to view trends based on tick intervals rather than time intervals. What makes trend lines so universal in use and attractive is that they can be used to help identify trends regardless of the time period, time frame or interval used.
The difference between trend lines and channels
Much more than one trend line can be used on a chart. Traders commonly use a trend line connecting highs across one span and another to connect lows to produce channels. A channel adds a visual representation of support and resistance for the time frame under review. Similar to a single trend line, traders look for a spike or dissolution to pull the cost action out of the channel. They have the ability to use that gap as an exit point or an entry point depending on how they are setting up their business.
Trend lines have constraints shared by each of the charting instruments in that they have to readjust as more cost data is entered. A trend line will sometimes last a long time, but occasionally the cost action will deviate enough that it is essential to update it. Additionally, merchants are constantly choosing different data points of view to connect with. For example, certain traders will use the lowest lows, while others will only be able to use the lowest closing costs over a period of time. In the end, trend lines applied over smaller time frames have the potential to be volume susceptible. A trend line formed at low volume can easily be broken while increasing volume during a session.
2- Line Information
This is used to collect data on a trend, be it bearish or bullish.
- Angle
- Bars
- Percentage of Raise or Lower.
3- Angle of a trend.
It is placed from the maximum or minimum point to the end of the same trend, be it bearish or bullish, in general a logarithmic graph is used to better visualize the development of the asset. Compared to previous trends.
4- VWAP (Volume weighted average price).
Volume Weighted Average Cost (VWAP) is a technical study instrument used to measure volume weighted average cost. The VWAP is typically used with intraday charts as a way to establish the general direction of intraday costs. It is similar to a moving average in that once cost is above VWAP, costs keep going up and once cost is below VWAP, costs keep falling. VWAP is used primarily by technical analysts to detect market trends.
Calculation
There are five steps in calculating VWAP:
Calculate the typical price for the period.
High + Low + Close / 3
Multiply the typical price by the volume for the period.
(Typical Price x Volume)
Create a typical price running total.
Cumulative (typical price x volume)
Create a running total for volume.
Cumulative (volume)
Divide the running totals.
VWAP = cumulative (typical price x volume) / cumulative (volume)
Basic Explanation:
The volume-weighted average cost indicator is similar to a moving average in that once costs advance, they remain above the indicator line and once they remain decreasing, they remain below the indicator line. However, keep in mind that, like a moving average, VWAP may also experience lag. The lag is inherent in the indicator since it is a calculation of an average using previous data.
VWAP can be used in any time frame: intraday (seconds, min, hours), week, month, year, decade, century. For example, if you select a weekly interval, the sum of the values will accumulate from the first trading day of each week.
Identification of trends
Identifying trends is a critical benefit of using the volume weighted average cost indicator. The hypothesis is quite easy however it could be quite effective, especially once it is used to confirm trading signals.
The uptrend is characterized by costs that trade above the VWAP.
The downtrend is the opposite.
Summary
The volume weighted average cost is an interesting indicator because, unlike many other technical study tools, it is the most correct for intraday study. It is a robust way to detect the underlying trend of an intraday lapse. Once the cost is above the VWAP, the trend increases and once it is below the VWAP, the trend decreases. However, there is a problem. Despite being used primarily on a day-to-day basis, there can still be a huge difference between the indicator and the cost. The indicator starts calculating when opening and stops calculating when closing. Therefore, for a chart that uses a short time span (that is, 1 minute), there may be several hundred periods in that single day. The closer you are to the close of the day, the longer the indicator will delay. In other words, true of any indicator that calculates an average using previous data.
Tickets:
Anchor period
Indicator calculation period. Probable values: session, week, month, year, decade, century.
Offset
Modifying this number will move the VWAP forward or backward, relative to the current market. Zero is the stated cost.
Style:
VWAP
You can toggle the visibility of the VWAP, as well as the visibility of a cost line that shows today's actual cost of the VWAP. Also, you can choose the color, thickness, and line style of the VWAP line.
Precision
Establish the number of decimal places that will be left in the cost of the indicator prior to rounding. The larger this number, the more decimal places will be in the cost of the indicator.
5- Horizontal Line
It is used to indicate a possible support or resistance, at a specific price.
6- Vertical Line
It is used to indicate a date or a price range between assets starting from a certain candle.
7- Crossing Line.
It is used for both Horizontal and Vertical data. Support-Resistance or Range from a certain date or price.
8- Arrow
This serves to indicate a certain moment or a beginning, a direction and finally an end of it.
9- SemiDirect Line.
It is used to see possible supports or resistances in the form of a channel exerting z in coordinates.
10- Direct Line.
Same meaning as Semi-direct taking part also to the previous part.
11- Channels.
The channel is a powerful yet commonly overlooked chart boss and combines some forms of technical study to give traders potential aspects of entering and exiting trades, as well as hazard control. The first step is to learn to detect channels. The next steps integrate establishing where and when to enter a trade, where to put stop-loss directives, and where to profit.
Channel characteristics
In the context of technical analysis, a channel occurs when the price of an asset moves between two parallel trend lines. The upper trend line connects the swing highs of the price, while the lower trend line connects the swing lows.
The channel can slope up, down, or sideways on the chart.
If the price breaks out of a trading channel to the upside, the move could indicate that the price will rebound further.
The trade channel technique consistently works best in trades with medium volatility, which could be critical in deciding the likely profit ratio of a trade. For example, if volatility is low, then the channel is not going to be huge enough, which means lower potential gains. Larger channels are usually associated with higher volatility, which means higher potential returns.
Channel types
A channel consists of at least 4 contact aspects as we require at least 2 minimums to connect with each other and 2 elevated ones to connect with each other. Generally, there are 3 types:
Channels that remain angled upward are called ascending channels.
Channels that angle downward are downward channels. The ascending and descending channels are also called trend channels as the cost moves more dominatingly in one direction.
Channels in which the trend lines are horizontal are called horizontal channels, trading ranges, or rectangles.
Buy or shorten the channel
Channels sometimes have the ability to grant buying and trading aspects and there are numerous rules for entering long or short positions:
Once the cost reaches the pre-eminent part of the channel, sell your existing extensive stance and / or take a short stance.
Once the cost is in the middle of the channel, do nothing if you do not have operations or if you keep your recent operations.
Once the cost hits the bottom of the channel, cover your existing short stance and / or take a long stance.
There are two exceptions to these rules:
If the cost goes through the top or bottom part of the channel, then the channel is not intact at the moment. Don't start any more trading until a new channel is developed.
If the cost shifts between the channels over a long period of time, a new, narrower channel can be established. At this point, enter or exit around the ends of the narrower channel.
Other ways of engineering are sometimes used to improve the accuracy of channel signals and to check the overall strength of the up or down shift. Several other tools to use throughout the channel business include:
What's more...
Moving Average Convergence Divergence (MACD) is commonly going to be close to zero along horizontal channels. The MACD line that crosses the signal line can also signal likely longs around the bottom of a channel or short trades around the prominent part of the channel.
A stochastic crossover can also indicate a buying possibility around the bottom of the channel or a trading possibility around the leading part.
The volume can also support commercial channels. The volume is often lower on the channels, especially around the middle of the channel. Shoots are constantly associated with a large volume. If the volume is not increased by one separation, there is a greater possibility that the channel will continue.
Determination of Stop Loss and Take-Profit levels
Channels have the ability to provide integrated money management skills in the form of stop-loss and take-profit levels. Here are the main rules to decide these aspects:
If you have bought at the bottom of the channel, exit and take your profit in the leading part of the channel, but also place a stop-loss order subtly below the bottom of the channel, which leaves room for regular volatility.
Determination of commercial reliability
The channels provide the function of establishing the possibility of success of an operation. This is done through something known as confirmations. Confirmations represent the proportion of times the cost has been recovered from the top or bottom of the channel. These are the relevant assertion levels that you should remember:
1-2: Weak channel (Non-negotiable)
3-4: Correct channel (Negotiable)
5-6: Deep Channel (Reliable)
6+: Fairly intense channel (Most reliable)
This only applies to traditional markets in general.
Estimation of the duration of the operation
The proportion of time it takes for an operation to reach a point of sale from a point of purchase can also be calculated using channels. This is done by recording the proportion of time it took for operations to run in the past and then averaging the proportion of time for the future. This estimate is based on the assumption that cost movements are approximately equivalent in terms of time and cost. However, it is only an estimate and may not always be strict.
Channels provide a way to buy and sell when price moves between trend lines. By "encapsulating" a stock's price movement with two parallel lines, buy and sell signals, as well as stop-loss and target levels, can be estimated. The duration of the channel helps determine the strength of the channel. The amount of time it typically takes for a price to move from high to low (or low to high) provides an estimate of how long trades can take.
12- Upper or lower plane
This type of graph is used for patterns such as Ascending Triangle or Descending Triangle. Which we will explain later. But the base is simple. A flat resistance or support along with a continuation of the trend. With a break.
13- Trend Regression.
Regression trends have the ability to use parallel channels in a similar way. The primary difference is that there are preeminent and lower bands that are set to a customer-determined number of standard deviations from a baseline. This is a good tool for establishing when a cost is unusually far from its baseline.
Preeminent deviation
Sets the number of standard deviations from the base to configure the preeminent channel. Fundamentally, this institutes the distance between the central base and the edge of the preeminent canal.
Lowest deviation
Sets the number of standard deviations from the base to configure the lower channel. Fundamentally, this institutes the distance between the central base and the edge of the lower canal.
Use preeminent deviation
Toggles the utilization / visibility of the preeminent channel.
Use a lower deviation
Toggles the use / visibility of the lower channel.
Source
Sets the source of costs to calculate channel posture.
Style
In the Style characteristics dialog box, it is feasible to modify the appearance of a regression trend.
Base
Sets the color, weight, and line style for the bottom channel and bottom line. The check box next to it toggles the visibility of the baseline.
Up
Sets the color, weight, and line style of the preeminent channel, as well as the weight and line style of its border. The check box next to it toggles the visibility of the preeminent channel.
Down
Sets the color, weight, and line style of the bottom channel, as well as the weight and line style of its border. The check box next to it toggles the visibility of the lower channel.
R
This check box toggles the visibility of the writing showing the cost of Pearson's correlation coefficient between both aspects of the regression trend.
Extend lines
Toggles the choice of lengthening the channel lines indefinitely to the right, even once it is out of the present chart view.
Coordinates
In the Coordinates characteristics dialog box, you can accurately position the views of the regression trend on the time axis by setting the bar number.
Point 1 bar
It enables the rigorous location of the first point of the regression trend using a bar number.
Point 2 bar
It enables the rigorous location of the second point of the regression trend using a bar number.
Visibility
In the Visibility Characteristics dialog box, you can modify the regression trend that is displayed in charts of different time periods.