There are many types of trendlines And today we will discuss some major types of trendlines which is used by many investors & traders for trading. Trendlines are the most simple and important tool for trader . Trendlines are very effective in trading and just simply learning trendlines you can make tons of money, no I am not joking .But before making money you have to know about trendlines and how  you can use it in trading . So in today’s blog we learn all about trendlines and how you can become master of it . 

What Are Trendlines ?

Trendline is nothing but in a simple language its a line which defines Trend. Trend can be up or down , depending on the stock or the markets in which we are trading. There are many types of trendlines such as horizontal, straight/linear,etc. we will talk about this in a separate section. But do you know trendlines work in All time frames , that means it doesn’t matter whether you are intraday trader, investor, long term trader, scalper or positional player. Trendline works beautifully in every stock, currencies, or for commodities. Trendlines are the lines from which price either takes support or resistance frequently. It serves as a guideline for a security’s price movement.

 

Types Of Trendlines ?

So, there are many types of trendlines, but we are discussing the major types of trendlines and its effect and how can you use it in trading .so , below are some examples of trendlines ::

1. Horizontal trendline.
2. Straight trendline (it can be upward or downward trendline)
3. Exponential trendline.
4. Moving Average.( yes , you can use moving average as a trendline )

Here, are some practical examples of trendlines below ::

so , let us discuss little about all these trendlines one by one ,

Horizontal Trendlines:

In Simple words, we can say that horizontal trendlines are those trendlines that are plotted straight and where price repeatedly takes support and tries to move up from there. And also we can say that it’s line where price repeatedly takes resistance and tries to move down from there. let us see this in chart so we can understand it clearly . 

Straight/Linear/upward/downward Trendline:

Its nothing but a line that is connects with many price points ,straight/linear trendline are basically those trendline that tells you whether the price is in an uptrend or in a downtrend in a particular time frame.

A straight trendline is a trendline from which price keeps coming back again and again to either create a buy zone or sell zone . let’s us take with an example ::

Exponential trendline.

A curving line known as an exponential trendline which makes basically a U- shaped pattern or rounding pattern which is commonly used by traders/investors for trading or investment . It is one of the most trusted pattern in stock market.  Rounding bottoms are observed near the end of long-term negative trends and indicate a price turnaround. 

 

How To Trade Trendline ? 

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In a trending market, timing your entries can be difficult because the pullback can be deep or shallow. 

Let me explain…

If the pullback is severe and you enter your trades too soon, you will have to endure a great deal of “pain.” 

 However, if the pullback is shallow and you enter trades too late, you may miss the move. 

  So, what’s the answer? 

  

  The Trend Line Breakout & Retest  strategy is your answer:: 

  

Here’s how it relates to your trendline trading strategy… 

1.   In an uptrend, wait for a pullback. 
2.   Draw a Trend Line connecting the pullback’s highs. 
3.   If the price breaks the Trend Line, then enter the trade.
4.   You can also wait for the retest of trendline for double confirmation. 
5.   Put stop loss below the near swing low .
6.   At least aim for 1:4 Risk Reward Ratio.

Here’s an illustration: 

 Logic behind the strategy ::

  It indicates that buyers are in charge and that the trend is likely to continue if the price breaks above the Trend Line. 

  If it doesn’t, the sellers are still in charge, and you should wait until the buyers have taken back control. 

It does make sense right ???

  Important points to remember while trading trendline:

 

• Trendline works in every time frame But remember One thing the bigger the time frame the more you can trust it.
• Never trade trendline alone always use another tools like Fibonacci, price action & moving averages, for confirmation.
• Always wait for retest before buying or selling.
• Be disciplined, make your own rules , and follow them with all your heart..
• It is very useful in finding out major/ long term trend , So, be careful if you are using it in a smaller time frame for trading or scapling.

How to plot Trendlines in chart ?

 

A trendline is created when two or more price swing points or pivot points can be connected diagonally. A trend line must, have at least three highs or lows in order to be considered reliable. In essence, a trend line’s validity increases with the number of times it is touched since more traders are utilizing it as support or resistance.

we also gives a step by step guide how you can plot trendline :

1. Zoom out your charts so that you can see a bigger picture .
2. Always define your time frame IF you are short term trader use 5,15, 45 min charts or vice versa .
3. Draw trend lines that connect at least 3 major swing points.
4. Adjust your trend line so, that you can touch more & more price points which makes your trendline more reliable.  

 

You can also watch full detailed video on you tube below::