How to Draw Trend Lines & Channels on XAGUSD Charts

Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a trend which is a sustained movement in one direction either upward or downwards.

A silver trend line depicts the points of support and resistance for the trading price, depending on the direction of the market. For an upward moving market trend - the trend line will shows the points of support and for a downward moving market trend - the trend line will show the areas of resistance - silver trend lines are mainly used by many traders to determine these resistance and support levels on xagusd charts.

A Silver Trend line is a slanting straight line that connects two or more xagusd price points and extends into the future to act as a zone of support or resistance for the price movement. There are 2 different types of silver trend lines: upward trend line and downward trend line. Silver trading trendline is an aspect of Silver analysis that uses silver line studies to try and predict where the next xagusd price move will head to. A trader must know how to draw & interpret signals generated by this trend line tool.

The basis of this silver analysis is based upon the idea that markets move in trends. Silver trading trendlines are used to show 3 things.

• The general direction of the market - up or down.
• The strength of the current trend - and
• Where future support and resistance will be likely located

If silver trend lines forms in a certain direction then the trading market usually moves in that direction for a period of time until a time when this trendline is broken.

Drawing these trend lines on a chart displays the general trend of the trading market which can either be upward or downwards.

Below is an example of how to draw these trend lines on charts

Tutorial: How to Draw Up-wards Trend Line & Trade Upwards Trend Move

Tutorial: How to Draw Downward Trendline and Trade Downward Trend Move

The MT4 silver trading software provides charting tools for drawing these trend lines on charts. To draw trend lines onto a xagusd chart, traders can use the trading tools provided on the MT4 software that is shown below.

To draw trend lines on a chart just click the MT4 Draw Trend Line Tools as shown above on the MT4 platform technical analysis software and select point A where you want to start drawing the trend line & then point B where you want the trend line to touch. You can also right-click on the trend line and on the properties option choose the option to extend its ray by ticking "ray check box", if you don't want to extend the trendline, then untick this option in your MetaTrader 4 trading platform. You can also change other trend line properties such as color and width on this property popup window of the trend line properties. You can download MT4 software and learn trend line analysis with it.

The trend is your friend. Is a popular saying among investors because you should never go against it. This is most reliable method to trade Silver because once xagusd trading prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this trend technique presents opportunity to make profits from the market.

Principles of How to Draw Trend Lines

1. Use candle charts

2. The points used to draw the trend line are along the lows of the trading price bars in a rising xagusd market. An upward bullish silver trend move is defined by higher highs and higher lows.
3. The points used to draw the trend line are along the highs of the price bars in a falling downwards market. A downwards bearish silver trend move is defined by lower highs & lower lows.
4. The points used to draw trend lines are extremes points - the high or the low xagusd trading price. These extremes are important because a close beyond the extreme tells investors the trend of the instrument may be changing. This is an entry or an exit signal.
5. The more often a trendline is hit but it is not broken, the more powerful its signal.

There are two main ways of trading this trendline analysis setup:

1. The Trend Line Bounce - Silver Trend Line Bounce
2. The Trend Line Break - Silver Trend Line Break

Technical Analysis Methods of Silver Trend Lines

The trend line bounce is a continuation signal where xagusd trading price bounces off this trend line to continue moving in the same direction. In a downward trend, the trading market will bounce downward after hitting this trend line level which is the resistance level. In an upward trend, the trading market will bounce upward after hitting this trend line level which is the support level.

The trend line break is a reversal signal where the trading market goes through the trend line & starts moving in the opposite direction. When a up silver trend is broken then sentiment of the trading market reverses & becomes bearish & when a down trend is broken then the market sentiment reverses and becomes bullish.

For very strong trends, after this trendline break trading signal, the price will consolidate for some time before moving in the opposite market direction. For short term silver trends then this trendline break signal will mean xagusd price might reverse direction immediately.

In silver trading, both the trend line bounce and the trendline break that are used in analysis charts are based upon these trend line levels being support and resistance levels.

Entry, Exit & Setting stops:

This trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these trend lines. The trend line bounce is a low-risk entry method used by xagusd traders to place entry trades after xagusd price has retraced. Silver trades are setup along these trend line levels and a stop loss placed just above or below these trend lines.

The trend line break is a crucial indicator of possible trend reversal. When the trend line is broken the price starts move in the opposite market direction. This provides an early exit signal for xagusd traders to exit their open trades and take profits. When there a penetration of these trend line levels, it is a signal that the trading price can start heading in opposite direction.

Unlike other silver analysis indicators there is no formula used to calculate the trend line, this trend line formation is just drawn between two chart points on the chart.