[00:02] you need to know about how to trade using trend lines so what you'll learn from this video is first how to actually draw them properly and second how you can utilize the trend lines to find high
[00:16] further ado let's get on with the video first of all what are trend lines so trend lines are simply market and the reason we draw them is because
[00:31] when the price approaches these key levels it can offer you multiple high win rate trade opportunities for example in a trendline strategy there are two types of patterns that
[00:44] may form when price approaches a trendline the first pattern is called the continuation pattern which is formed when the price bounces back to the direction of a trend right after hitting a trendline and the
[00:57] pattern is the breakout pattern which is formed when the price broke out of a trend line causing the trend to switch directions the trend line doesn't guarantee that a trend change
[01:12] will occur you need to use additional price action techniques to confirm your analysis which i will discuss later in the video i'm going to show you a simple way of drawing trend lines effectively one of
[01:26] ask when drawing trend lines is should you draw them hitting the wick's end the candles close or the candle's body well the answer is you want to draw them where it can get you the most amount of touches as
[01:40] possible let me give you an example in this chart we spotted a current uptrend as prices made higher highs and higher lows now because this is an uptrend
[01:52] line below the trend then you want to adjust the trend line then you want to adjust the trend line to get as many touches as possible now notice that there are some points that are overlapping the trend line
[02:06] trend line at all which is perfectly fine because remember a trend line is supposed to be treated as a general area just like support and resistance so let's look at another example
[02:20] here we spotted a current downtrend as prices made lower highs and lower lows and because this is a downtrend line above the trend and again you adjust it to get as many
[02:34] touches as possible and so it's that simple so now that you know how to draw trendlines effectively it's time to go in depth into how you can utilize these trendlines to find high probability trait setups
[02:48] so first let's start with the continuation pattern which is a pattern that occurs when price bounces back to the direction of a right after hitting a trend line now remember
[03:00] you cannot immediately take a position just because the price hits a trend line you need to use other price action techniques to confirm your analysis and a good technique that you can use to confirm a continuation pattern
[03:13] the pullback the next step is to wait for the price to confirm the continuation pattern by waiting for it to break out of the once the pattern was confirmed you take a buy position
[03:33] we spotted a downtrend and so we place our trend line above here then as we look at the current price we spotted another possible continuation pattern so the next step is you want to confirm
[03:46] by drawing a mini trend line at the pullback and once the price broke out pullback and once the price broke out you take a sell position
[04:00] you confirm a continuation pattern is the stochastics here's how the strategy works in this chart we spotted a current uptrend and so we place our trend line below it
[04:12] now as we look at the current price we spotted a possible continuation pattern as price hits the trend line and at this point notice that the stochastics is at the oversold level and so you want to utilize the
[04:25] continuation pattern by waiting for it to cross back inside the oversold level once the pattern was confirmed you take [Music]
[04:38] so let's look at another example in this chart we spotted a downtrend and so we place our trend line above the downtrend next as we look at the current price we spotted another possible continuation
[04:51] as price hits the trend line while the stochastics is at overbought stochastics to confirm the continuation pattern the overbought level and once the pattern was confirmed you
[05:06] and once the pattern was confirmed you take a cell position now moving on to the second pattern which is called the breakout pattern of a trendline causing the trend to switch directions
[05:21] you cannot take a position just because the price broke out of a trendline because it doesn't guarantee that a trend change will occur you still need breakouts and one of the ways you can do this is
[05:35] by looking for signs of momentum loss before the breakout let me give you an example in this chart we can see that the price is on an here now you can see that the price were
[05:48] making higher highs however when we looked at the latest price action the price suddenly made a lower highs instead what this means is that buyers failed to push the price higher
[06:00] which is a sign of momentum loss then we saw that the price broke out of the trend change so this is a good opportunity to take a sell position [Music]
[06:14] let's look at another example here we spotted a downtrend and so we place our trend line above it now notice that the price were making lower lows before suddenly it made a higher lows instead indicating
[06:27] that a downwards trend was losing momentum then we saw the again further confirms the trend change and so this is a good opportunity to take a buy position
[06:44] can use to confirm a trendline breakout is by spotting double rejections before a breakout appears let me give you an example in this chart uptrend as prices were making higher highs now
[06:58] as we look at the latest price action we saw that the price failed to make higher highs and formed a double top pattern instead area which is also a sign of momentum loss
[07:12] we saw the price broke out of the trend line which further confirms the trend so this is a good opportunity to take a sell position
[07:26] here we spotted a downtrend and so we place a trend line above it as prices were making lower lows then we also noticed the same double rejection indicating that there's a strong support zone within this area
[07:41] trend line which again confirms the trend change to and so this is a good opportunity to take a buy position
[07:56] you confirm a price breakout pattern is the rsi but first to the indicator so you want to go to the indicator settings and change these two values to 50.
[08:10] middle like this and the way we implement the rsi to our strategy is by only taking buy positions if the rsi is above the 50 line and only taking cell positions if the
[08:23] rsi is below the 50 line so let's look at this strategy in action we spotted an uptrend and so we want to draw our trend line below here now notice that the price broke below the trend line signaling a possible
[08:38] trend change however you can see that the rsi is and so you don't want to take any positions yet you need to wait for the rsi to confirm the trend change by waiting for it to cross below the 50
[08:51] line once this happens you take a sell once this happens you take a sell position can immediately trade right now and all i ask for in return is
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[09:21] watching and i'll see you in the next video