How to Draw Bitcoin Trend-Lines & Channels on Cryptocurrency Charts
Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a bitcoin trend which is a sustained movement in one direction either upward or downwards.
A bitcoin trend line depicts the points of support and resistance for the bitcoin trading price, depending on the direction of the market. For an upward moving cryptocurrency trading market trend - bitcoin trend line will shows the points of support and for a downward moving cryptocurrency trading market trend - bitcoin trend line will show the areas of resistance - bitcoin trend lines are mainly used by many cryptocurrency traders to determine these resistance and support levels on charts.
A Bitcoin Trend line is a slanting straight line that connects two or more price points and extends into the future to act as a zone of support or resistance for the trading price movement. There are two different types of bitcoin trend lines: upward bitcoin trend line and downward bitcoin trend line. Bitcoin trend line is an aspect of cryptocurrency trading technical analysis that uses crypto line studies to try and predict where the next bitcoin trading price move will head to. A trader must know how to draw & interpret cryptocurrency signals generated by this bitcoin trend line tool.
The basis of this cryptocurrency trading technical analysis is based upon the idea that cryptocurrency markets move in trends. Bitcoin trend lines are used to show 3 things.
- The general direction of the market - up or down.
- The strength of the current bitcoin trend - and
- Where future support and resistance will be likely located
If bitcoin trend lines forms in a certain direction then the btcusd trading market usually moves in that direction for a period of time until a time when this bitcoin trend line is broken.
Drawing these bitcoin trendlines on a cryptocurrency chart shows the general bitcoin trend of the btcusd trading market which can either be upward or downwards.
Shown Below is an example of how to draw these bitcoin trend lines on charts
Tutorial: How to Draw Upwards Bitcoin Trend-Line & Trade Upwards Bitcoin Trend Move
Tutorial: How to Draw Downwards Bitcoin Trendline and Trade Downward Bitcoin Trend Move
The MT4 software provides crypto charting tools for drawing these bitcoin trend lines on cryptocurrency charts. To draw bitcoin trend lines onto a crypto chart, cryptocurrency traders can use the trading tools provided on the MT4 software that is shown below.
To draw bitcoin trendlines on a cryptocurrency chart just click the Cryptocurrency MT4 Draw Bitcoin Trend Line Tools as shown above on the MT4 platform technical analysis software and select point A where you want to start drawing the bitcoin trend line & then point B where you want the bitcoin trend line to touch. You can also right click on the bitcoin 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 bitcoin trendline, then uncheck this option in your MT4 platform. You can also change other bitcoin trend line properties such as color and width on this property popup window of the bitcoin trend line properties. You can download MT4 software and learn bitcoin trend-line technical analysis with it.
The bitcoin trend is your friend. Is a popular saying among traders because you should never go against it. This is the most reliable technique to trade Bitcoin because once bitcoin trading prices start to move in one direction they can continue to move in that particular direction for quite some time - therefore using this bitcoin trend technique presents opportunity to make profits from the btcusd trading market.
Principles of How to Draw Bitcoin Trend Lines
Use bitcoin trading candlestick charts
- The points used to draw the bitcoin trendline are along the lows of the bitcoin trading price bars in a rising bitcoin market. An upward bullish bitcoin trend move is defined by higher highs and higher lows.
- The points used to draw the bitcoin trendline are along the highs of the price bars in a falling downwards market. A downwards bearish bitcoin trend move is defined by lower highs & lower lows.
- The points used to draw bitcoin trend lines are extremes points - the high or the low bitcoin trading price. These extremes are important because a close beyond the extreme tells investors the bitcoin trend might be changing. This is an entry or an exit signal.
- The more often a bitcoin trendline is hit but it is not broken, the more powerful its signal.
There are two main ways of trading this bitcoin trend-line technical analysis setup:
- The Bitcoin Trend-Line Bounce - Bitcoin Trend Line Bounce
- The Bitcoin Trendline Break - Bitcoin Trend-Line Break
Technical Analysis Methods of BTCUSD Trend Lines
The bitcoin trendline bounce is a continuation cryptocurrency signal where bitcoin trading price bounces off this bitcoin trend line to continue moving in the same direction. In a downward bitcoin trend, the btcusd trading market will bounce downward after hitting this bitcoin trend line level which is the resistance level. In an upward bitcoin trend, the btcusd trading market will bounce upwards after hitting this bitcoin trend line level which is the support level.
The bitcoin trend-line break is a reversal cryptocurrency signal where the btcusd trading market goes through the bitcoin trend line & starts moving in the opposite direction. When a up bitcoin trend is broken then the sentiment of the btcusd trading market reverses & becomes bearish and when a down bitcoin trend is broken then the btcusd market sentiment reverses and becomes bullish.
For very strong bitcoin trends, after this bitcoin trend-line break signal, the bitcoin trading price will consolidate for some time before heading in the opposite direction. For short term bitcoin trends then this bitcoin trendline break cryptocurrency signal will mean price might reverse direction immediately.
In bitcoin trading, both the bitcoin trend line bounce and the bitcoin trendline break that are used in technical analysis charts are based upon these bitcoin trend line levels being support and resistance areas.
Entry, Exit and Setting stops:
This bitcoin trend line trading method is used to determine good entry and exit points, protective stops are placed just above or below these bitcoin trend lines. The bitcoin trend line bounce is a low-risk entry method used by cryptocurrency traders to place entry trades after bitcoin trading price has retraced. Bitcoin trades are setup along these bitcoin trend line levels and a stop loss placed just above or below these bitcoin trend lines.
The bitcoin trendline break is a crucial technical indicator of possible bitcoin trend reversal. When the bitcoin trend line is broken the bitcoin trading price starts move in the opposite direction. This provides an early exit signal for cryptocurrency traders to exit their open trades and take profits. When there a penetration of these bitcoin trend line levels, it is a signal that the bitcoin trading price can start heading in the opposite direction.
Unlike other cryptocurrency trading technical analysis indicators there is no formula used to calculate the bitcoin trend line, this bitcoin trend line formation is just plotted between two chart points on the chart.
