How to draw trendlines methodically for Extremes (Valley’s and Peak’s)
How to draw trendlines methodically for Extremes (Valley’s and Peak’s)
Rules To Draw A Trendline:
1. Identifying potential reversals. We don’t need an opposing zone eliminated in order to draw a trendline, it can be used as confluence. If an opposing zone is eliminated then we’ll have a trend.
2. We should be Connecting the last two bullish or bearish impulses on every timeframe of our sequence.
3. Learn as soon as possible when opposing impulses are being created on your trading timeframe, if that happens we must lean on timeframes higher than the one when we start seeing opposing impulses. If the trend is down and bearish impulses are being created, what would you think if the next impulse is bullish and stronger than the last bearish impulse? Wouldn’t you think the market dynamics for that timeframe are changing? Exactly. That’s the reason why the trendlines are drawn like this.
4. The break of a trendline with a full OHCL candle will create a potential imbalance.
5. Using trendlines in combination with multiple timeframe analysis and the sequence can give you the exact point where a new trade setup can occur.
6. Trendlines can signal that a change in trend may occur.
7. We’ll need at least two touches of the trend line connecting the latest two obvious valleys and peaks (swing lows and swing highs), the more touches the TL has the more structured and powerful the trendline and trend will be.
