Video 4: Trendlines 101

Trendlines 101

This is Paul Wett from here to talk to you about “trendlines 101” folks, trendlines 101 folks. I want to teach you guys the definition of trendlines are, what they look like, how to draw them, and how to make some stinking money using trendlines in

First of all, let’s start with the definition, definition of Trendline; A line that is draw over pivot highs or under pivot lows to show the prevailing direction of the market. Trendlines are visual representations of support and resistance in any time frame. Folks, any time frame, that’s emphasized, any time frame. Let me show you what I’m talking about folks. Trendlines, trendlines, trendlines; any time frame. We could draw trendlines from here, from pivot highs to next pivot high; from pivot lows to next pivot lows. No matter how you draw it, it’s a trend and this trend is telling me what? It’s going down, down, down. Pivot high, pivot hight. Pivot low, pivot low. Now what’s this showing me folks? Show me that there’s an area here for support.

Now the other thing about this; any time frame, in any time frame folks. Let’s look at the longer time frame. Now this is a 15 minute chart, this is a 15 minute chart folks and I like trendlines a lot, they make a lot of money on big on trendlines. Trendlines show me where are the market is coiling up. Pivot low, pivot low, pivot high, pivot high. What I do is I choose a significant high to a significant low and when I want to draw my trendlines, I always want to make sure that I have something at the bottom in between them. So if I’m drawing my low to low, I want to make sure that I’ve got a high there. Subsequently, if I’m drawing my trendline from my high to high, I want to make sure that I have a low on between the time period. Trendlines can be horizontal, vertical; support and resistance, this is like more of a channel but this is the same thing. Once again, it tells you the direction of the trend. Folks, if there anything else that you want to learn from it’s the direction of the trend. Now this was the action that we’ve got on a Friday; unemployment numbers coming out. This was before it’s coming out, this is when it came out and as you can clearly see folks; we’re going from high low, high low, and sideways action.

On the trendlines, you can check on any time frame. Any time frame folks, any time frame. Here’s a nice trendline here, we got trendlines here telling us we’re making higher high and that’s all we’re trying to do. We’re trying to define a trend with a trendline, what’s a definition of a trend? Higher high, higher low, higher high; and a downtrend, same thing. It’s gonna be lower lows and lower highs. So we have a lower high here. Let’s keep pulling back and check this market out a little bit further folks, a little bit further on these trends. These trendlines, like what I’ve said, can be horizontal, and be vertical; you can even have clips of trendlines. All these telling you folks is where the support and resistance is at this markets. Support and resistance. We have a high here, we have a low here. We have a high here, we have a low here. We have another high here right? One, two, three, four, five; that’s a five bar high. That’s what I use to define even though that this one is lower, it’s not significant. Why? It’s not significant, because it’s not a five bar low right here. I want a five bar low. My definition of a trend bar, I need to have at least one, two, three, four, five bars. It’s gonna be the lowest of the five to the left and to the right. (One, two, three, four, five) See? So as we’re building this forward, obviously as you’re building this you won’t see this data here. But if we go back five bars here, this is a low. Go back five bars here, this is the highest high. What this is, this is the market consolidating, getting ready for a big move and look at see what it did; yeah it moved alright.

See now we’re backing it up folks, once again, trendlines, trendlines, trendlines. Trendlines, trendlines, trendlines. Trendlines, trendlines, trendlines; and this is a great, great example folks, great example. Look at that, significant high, significant low. Now significant high here right? Because this one wasn’t higher, see? So this is like a fakey, and the market will do that now with all the automation, we blow through but we did not take that high out, really close. Lower low, lower low here. So we have a high,low; high,low. I like to get my high – lows, high – lows in because I wanna know. Here’s my high, here’s my low, here’s my low. See? This is where I’m thinking a head and shoulder, trendlines, but it looks like that we’re having a head and shoulder continuation here; possibly going down, making a new low. If we want to see where this thing could go, we want to draw the lines but we penetrate this line but let’s keep pulling back folks, let’s see if we do keep pulling back. That was a 240, now we’re getting to 360. See, where we’re gonna ran out of significant high, look at that 21.25, 22; 21.75. See how these trendlines are getting a little different now as we’re pulling back in time. (One, two, three, four, five) See these are cycle highs, (One, two, three, four, five) now this is now the cycle low. Why? (One, two, three, four, five) We didn’t make a significant low here. See? When I draw my trendline, I need to go from significant high to significant hight. Look at that, that is amazing how that looks! If that’s gonna tell you what’s going on (bam bam bam bam) we hit that same trendline. One, two times here, sold off; finally came through and retested it because that will happen if you have a down trendlines; same thing gonna have an uptrend. I could go here because that is a significant low, here’s a significant high. Here’s another significant high; here’s actually a significant high and significant low in the same bar. This is what happens when the markets get sideways and you could always have a horizontal lines as well, (one two, one two) this tells me that we might have a high probability that this market could be coming down. Obviously here, you could see the pattern here, it looks like a descending; descending triangle (one, two, three) (one, two, three) down in here. We got to retest this low probably.

Okay, let’s pull out a little bit further on our trading the trend, folks. See as we pull back out, pull back out; this moving average right here is showing me where the trend is right here, it’s the same down right? (same down, down, down, down, down) This is another indication; this is a higher high, higher high, higher low scenario but this looks like a butterfly or rising wedge coming down continuation of our downtrend here. So we have a high here, we have a low here where do I draw my lines? I don’t have (one, two, three, four)  I don’t have a five bar low here. Do I? So I’ve got to wait. I’ve got to wait. This is my point folks. As you pull back these charts, it gives you a different angle of what’s really going on. As I pull back, and pull back. This is a typo double here (that’s fine). As you pull back and you pull back. Let’s pull back on the monthly. See? Now the monthly looks totally different. Totally different because here; according to the monthly this is a five bar low. This is not! (one, two, three, four, five) no, we took that low out. So as we speak (one, two, three, four, five) it’s a five bar low here but moving forward folks, we don’t know. We don’t know if it’s gonna hold but I’ll tell you right now, this is a good place to put a trendline. We know that we’ve got some resistance here, see? This is my point folks. You want to watch these trendlines, you wanna watch them because you can really make some money on these high probability, low risk trades if you trade with the trend, the trend will always be your friend. Try our free demo, like me on Facebook, get a free demo, this has been your Trendlines 101 folks, thank you.

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