Trend lines connect swing lows (uptrend) or swing highs (downtrend) to define the trend direction and provide dynamic support/resistance. Channels add a parallel line to create a trading range within the trend. Trend line breaks signal potential trend changes. Valid trend lines require at least two touches, with three or more being more significant.
Uptrend line: connects ascending swing lows (rising support). Downtrend line: connects descending swing highs (falling resistance). Parallel channels: trend line + parallel creating a range. Inner trend lines: steeper lines within the main trend. Fan lines: multiple trend lines showing acceleration/deceleration.
Buy at uptrend line support (at least third touch), Sell at downtrend line resistance (at least third touch), Trade within channel: buy at support, sell at resistance, Channel breakout trade: enter on break + retest of channel boundary
Target the opposite channel boundary for range trades. For trend line break trades, measure the channel width and project from the break point. Stop beyond the trend line + buffer.
All timeframes — use higher TF trend lines for bias, lower TF for entries
Be careful drawing trend lines to fit your bias. Valid trend lines should be obvious — if you have to hunt for them, they probably aren't significant. The steeper the trend line, the more likely it is to break.
The Relative Strength Index (RSI) and Stochastic Oscillator are bounded momentum indicators that identify overbought and oversold conditions. RSI (default: 14) ranges from 0-100; readings above 70 suggest overbought, below 30 oversold. Stochastic (default: 14, 3, 3) measures where the close falls within the recent high-low range.
Multi-timeframe analysis (MTA) uses multiple chart timeframes to build a complete picture of market conditions. The higher timeframe provides trend direction and key levels. The intermediate timeframe confirms momentum. The lower timeframe provides precise entry timing. This 'top-down' approach dramatically improves trade quality.
Supply and demand zones are price areas where significant buying or selling previously occurred, causing a strong directional move away from the zone. Unlike traditional support and resistance which uses lines, supply and demand trading identifies zones — ranges of price — where institutional orders created imbalances. When price returns to these zones, unfilled orders may trigger a reaction, providing high-probability trading opportunities.
Support and resistance (S/R) levels are price zones where buying or selling pressure has historically prevented the price from continuing in its current direction. Support is a floor where buying emerges; resistance is a ceiling where selling appears. S/R levels are the foundation of technical analysis and provide the framework for every trade setup.