How to Draw Bitcoin Trend Lines & Bitcoin Channels on Bitcoin Charts

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

This trend can be depicted by a trend line.

A trend line depicts points of support and resistance for the BTCUSD Crypto price, depending on the direction of the market prices. For an upward moving market a trend-line will show the points of support & for a downwards market the trend-line will show levels of resistance. Trend lines are mainly used by investors to determine these points of support & resistance.

A Trend Line is a straight line that connects two or more price points and then extends into the future to act as a level of support or resistance.

There are two types of trend lines: upward trend line and downward trend-line. Trendline is an aspect of analysis that uses line studies to try & predict where the next price move is likely to head to.

A trader wanting to trade Bitcoin bitcoin trading online using trading analysis must know how to draw & interpret the signals generated by this trend-line trading tool.

Trend line analysis is based upon the idea that the market prices of Bitcoin move in trends. The trend lines show three things about current trend, these are:

The over-all direction of the market - whether up or down
The strength of the current move
Where future support and resistance points will likely be located

If a trend line forms in a particular direction, then the market usually moves in that particular direction for quite some time until the time when this trend is broken. When the trend is broken the trend line will also be broken - meaning price will move below an up-wards trend line or above a downwards trend line.

Plotting trend lines on Bitcoin charts shows the general trend of the Bitcoin prices - which can either be upwards or downward.

The example below sHow to draw trend lines:

Upward Trend-Line

How to Draw Upwards Bitcoin Trend Line on Bitcoin Chart - Upward Bitcoin Trendline

Upward Trend Line - Upward Trend of Bitcoin Prices

Downwards Trendline

How to a Bitcoin Draw Trend Line on Bitcoin Chart on MetaTrader 5 Explained - How to Draw Trend Lines & Channels on BTCUSD Charts

Downward Trend Line - Downwards Trend of Bitcoin Prices

Drawing Trend Lines on Bitcoin Charts Using MetaTrader 5 Software

The MT5 software provides technical charting tools for drawing these trendlines on the BTCUSD Bitcoin trading charts. Traders can use the drawing tools provided on the MetaTrader 5 software as illustrated below to draw these trend-lines.

How to Draw Bitcoin Trend Line on Bitcoin Charts in MT5 - How Do I Draw Trendlines and Channels on BTCUSD Charts?

MT5 Platform Trend Line Drawing Tool

To plot trendlines on a Bitcoin trading chart just click the line drawing tool shown above on the MetaTrader 5 analysis software and select point A where you want to begin drawing the trend-line and then point B where you want the trend-line to touch. You also can right click on the trend line & after right clicking on it, on "properties" option choose the option to extend its ray by ticking "ray check box", if you don't want to extend it, then uncheck this option in your MetaTrader 5 software. You also can change other properties such as colour and width of the trend line on this property settings pop-up window.

"The trend is your friend". Is a popular saying among investors because you should never go against the market trend. The trend is the most reliable method to trade Bitcoin prices because once prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this method presents you with the best chances to make profits from the online Bitcoin cryptocurrency trading market.

Principles of How to Draw Trendlines

Use candlestick charts to draw trend-lines
The points used to draw the trend lines are along the lows of the price bars in an upward trend market. An upwards bullish moving trend is defined by higher highs & higher lows.
The points used to draw are along the highs of the price bars in a downward trend market. A downwards bullish move is defined by lower highs & lower lows.
The points used to plot trend-lines are extremes points - the high or the low price. These extreme points are important because a close beyond the extreme tells investors & traders that the trend of the BTCUSD BTCUSD Crypto prices might be changing. This is interpreted as an entry or an exit signal.
The more often a trend line is hit but it is not broken, the more powerful its trading signal is.

There are two main ways of trading this set-up:

The Trend Line Bounce
The Trend Line Break

Analysis of These Two Methods

The trend-line bounce is a continuation signal where price bounces off this trend line & continues moving in the same direction as the trend line.

In an upwards trend move, the market will bounce up-wards after hitting this level which is the support zone.

In a downwards trend move, the market will bounce downward after hitting this level which is the resistance level.

The trend-line break is a reversal signal where the market goes through the trend-line and starts heading in the opposite direction.

When an uptrend is broken then the sentiment of the market reverses & becomes bearishWhen a down-trend is broken then the sentiment of the market reverses and becomes bullish

For very strong trends, after this trend line break signal, the price will consolidate for some time before going in the opposite trend direction. For short term trends then this trend-line break signal will mean price may reverse immediately.

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

Using Trendlines as Entry Signals, Exit Signals - and for Setting Stops:

This trend line trading method is used to determine good entry and exit points for opening and closing Bitcoin trades, protective stops are placed just below or above these trend lines. The trend-line bounce is a low-risk entry method used by investors & traders to place entry trades after price has retraced but the market price is still within the trend direction. Trades are setup along these trend line levels and a stoploss order placed just above or below the trend line.

The trend-line break is a crucial technical indicator of possible trend reversal. When a trendline is broken the price starts to head in opposite trend direction. This provides an early exit signal for investors & traders to get out of their open trade positions and take profits. When there is a penetration of these trend-line levels, it is a signal that the price may reverse begin moving in the opposite direction.

Unlike other technical analysis indicators there is no formula used to calculate trend lines, this trend line formation is just plotted between two chart points and a btc usd trader has to learn how to draw these trend lines on their Bitcoin cryptocurrency trading charts.

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