How Do I Draw Commodities Trend Lines Correctly?

Commodity Trading How to Draw Commodities Trend Lines Correctly - Detailed Guide on How to Draw Commodities Trend Lines Correctly

Principles of How to Draw Commodities Trend Lines Correctly

1. Use commodity candlestick charts

2. The points used to draw are along the lows of the commodities price bars in a bullish commodity market. An upward bullish commodity trend is defined by higher highs and higher lows.
3. The points used to draw are along the highs of the commodities price bars in a bearish commodity market. A downward bearish commodity trend is defined by lower highs and lower lows.
4. The points used to draw commodity trend lines are extremes points - the high or the low commodities price. These extremes are important because a close beyond the extreme tells commodity traders the commodity trend of commodity might be changing. This is an entry or an exit commodity signal.
5. The more often a commodity trend line is hit but not broken, the more powerful its commodity trend signal.

Example 1: How to Draw Commodities Upward Commodities Trend Line Correctly

To draw an upward commodity trend line correctly use two support points in a bullish upward commodity trend so as to draw the upward commodity trend line and then extend the commodity trend line as shown below. The upward commodity trend line will show the general direction of commodity prices and as long as commodities price is above this upward commodity trend line then the upward commodity trend will remain intact - bullish upward commodities trend.

If commodity prices move below the upward commodity trend line which is the support level for the bullish upward commodity trend then traders should close all their open commodities trades - because this might be a commodity trend reversal commodity signal. In an upward commodity trend commodities price should generally stay above the support level which is marked by the upward commodity trend line.

How to Draw Commodities Trend Lines Correctly for Upward Commodities Trend

How to Draw Commodities Upward Commodities Trend Line Correctly - How to Draw Commodities Trend Lines Correctly

Example 2: How to Draw Commodities Downward Commodities Trend Line Correctly

To draw a downward commodity trend line correctly use two resistance points in a bearish downward commodity trend so as to draw the downward commodity trend line and then extend the commodity trend line as shown below. The downward commodity trend line will show the general direction of commodity prices and as long as commodities price is below this downward commodity trend line then the downward commodity trend will remain intact - bearish downward commodities trend.

If commodity prices move above the downward commodity trend line which is the resistance level for the bearish downward commodity trend then traders should close all their open commodities trades - because this might be a commodity trend reversal commodity signal. In an downward commodity trend commodities price should generally stay below the resistance level which is marked by the downward commodity trend line.

How to Draw Commodities Trend Lines Correctly for Downward Commodities Trend

How to Draw Commodities Downward Commodities Trend Line Correctly - How to Draw Commodities Trend Lines Correctly