Downwards Bitcoin Trendlines & Channels
Downward Bitcoin Trend Line MT4 Bitcoin Trend Line Indicator
A downwards trendline is plotted above the crypto downward trend pattern formed by consecutive lower highs, the downward trendline must connect at least 2 highs, with the most recent high being lower. For our crypto downward trend examples we shall use the MT4 technical analysis software cryptocurrency charts to illustrate example of downward cryptocurrency trend.
Since bitcoin price moves down in a zigzag manner bitcoin traders normally draw a downward trendline which shows the general downward direction of the bitcoin prices. In cryptocurrency market technical analysis, this general bitcoin price direction is referred to as the TREND by cryptocurrency traders. In cryptocurrency trading technical analysis definition we can define this down trend-line is drawn on Bitcoin chart showing the resistance areas (bearish market direction).
A down trend occurs when the bitcoin price forms a series of lower highs and lower lows. Each price high is going to be lower than the previous high - lower high, and each low is lower than the previous low - lower low therefore showing bearish bitcoin price movement.
BTCUSD Crypto Down trend-lines gain more validity each time bitcoin price touches the downwards trend line but does not penetrate the trend line. A down trend remains the general direction until this series of lower highs and lower lows is broken.
In cryptocurrency trading technical analysis, An up side penetration of a down trend line is a technical buy bitcoin trading signal, and usually the first indication that the bearish direction of bitcoin prices may soon reverse.
Downward Bitcoin Trend Line MT4 Bitcoin Trend Lines Indicator
When it comes to learning how to draw & learning cryptocurrency trading technical analysis of cryptocurrency charts, you need to know that when the btcusd trading market is bearish it forms lower lows and lower highs forming a downward general market direction. These are the points that are used to draw the downward trend line.
To draw this crypto downward trend setup we use resistances and to do it correctly two resistances are needed. When bitcoin price touches this trend line, then we sell and place stop loss just a few pips above the sloping resistances:
Trading This Downward Bitcoin Trend Market Move
When trading with this trend line trading method, this trend line setup will show the general direction of the market as downward therefore bitcoin traders will only open short sell cryptocurrency trades. These are the levels where if bitcoin price retraces then these points will provide strong resistance. This is why many short sellers will wait until bitcoin price retraces upwards & hits these retracements levels to open sell cryptocurrency trades. Bitcoin trades opened at these levels have a high Risk to Reward Ratio with minimum draw down.
For Example, in the above bitcoin trading example, a trader would have opened short sell bitcoin trading signals at the resistance1, resistance2, resistance3 and these sell cryptocurrency trades would have made a lot of profits with minimum amount of drawdown/retracement.
Downward Bitcoin Channel MT4 Channel Indicator
A crypto downward channel is plotted by plotting a line that's parallel to the downward trendline and then adjusting it to touch the bottoms boundary of the bitcoin price movement. This then forms a downwards crypto channel & as long as the bitcoin price stays between these two channels the general cryptocurrency market direction is intact the btcusd market direction will continue being bearish.
Trading the Downwards Cryptocurrency Channel
The downward crypto channel is used by cryptocurrency traders to show levels where it is best to take profits. Traders will take some profit once the bitcoin price touches the lower channel & wait for another retracement before opening a short sell bitcoin trade again.
MT4 Tools for Drawing Bitcoin Channels
The bitcoin trading tools to draw these crypto channels studies on the MT4 bitcoin charts are found on the Lines Toolbar within the MT4 platform, to access this MT4 tool bar if it is not activated on your MT4 Bitcoin Platform, Click in "View" Next to "File" at the tops left corner of the MT4 Bitcoin Trading Software & click View, Then Click on Toolbars, Then Check the Lines Toolbar by clicking on it.
Shown Below is the screenshot of these MT4 tools: just click on this MT4 channels drawing tool and select the point to where you want to place this crypto channels tool on the bitcoin chart.
MetaTrader 4 Technical Analysis Charts - Downwards Bitcoin Channels
MT4 Toolbar - MT4 Tools for Drawing Bitcoin Trend-Lines & Bitcoin Channels used to obtain these trend line drawing tools is shown above, to draw these trend line setups or crypto channels, just select the above MT4 trend line drawing tools shown on the MT4 software and select the two points where you want to draw the crypto downward trend line.
This trend line trading strategy is one of the simplest and popular crypto indicators used by cryptocurrency traders to analyze the btcusd trading market trend direction.
