Using Trend Lines on Currency Charts

Drawing Basic Trend Lines - Traders frequently use trend lines to define an existing trend or direction on a given time frame (short-term, intermediate, long-term, etc.) for a specific currency pair. In an uptrend (continuously rising prices), trend lines are usually drawn connecting the bottoms of the waves that form the trend. The rising line is considered an area of support, from where the currency has a higher probability of rising. Conversely, in a downtrend, trend lines are drawn connecting the tops and are considered resistance areas.

To draw a single trend line on the currency chart using our trading software, click on the button shown below. Then, click on the point on the chart where you want the beginning of the trend line to be and a black line will appear. Drag the line to the desired end point and click again. A red trend line, like the one on the graph below, will appear with a number labeled in red. This number is the the rate on the price scale that corresponds to the endpoint of the trend line. If more than one trend line is drawn on the chart, only the price of the last one will be shown.

Drawing Parallel Trend Lines - Parallel lines are commonly drawn by currency traders when the trend or consolidation (sideways price movement) can be constrained between parallel lines. Our currency software makes the drawing of parallel trend lines easy to do. After drawing the first trend line as explained above, pressing the fourth button on the toolbar (see below) enables the parallel trend line drawing function. Automatically, a black line parallel to the last trend line that was drawn drawn and of equal length appears. This line can be moved around by drawing the mouse and when it is positioned at the desired location, another click of the mouse will fix the parallel line on the chart. Once the line is plotted, it will turn red and the price on the vertical scale corresponding to the end point will be shown on the graph.

Erasing Trend Lines - To remove the last trend line drawn from the currency chart, click the button with the symbol of a trend line and an eraser (button on the left highlighted below). The button to the right of this one, that shows a trend line with a red "X" can be used to remove all of the trend lines from the graph.