1. What is a Trend Line?
Principle in one sentence: A trend line is the "roadmap" of price movement, helping you quickly see whether the price is climbing (rising), descending (falling), or moving sideways (consolidating).
Uptrend Line: When the price drops to a certain low point and then rebounds, connecting these low points forms an upward sloping line, like steps of a staircase, getting higher as you go.
Downtrend Line: When the price rises to a certain high point and then turns back down, connecting these high points forms a downward sloping line, like a downhill path, getting lower as you go.
Sideways Trend Line: The price oscillates within a "box," connecting high points forms a horizontal line (ceiling), and low points also form a horizontal line (floor).
Why is it useful?
To find potential "support" (places where the price stops falling) and "resistance" (places where the price stops rising).
To foresee potential trend changes (for example, breaking below an uptrend line may indicate that the price may not rise anymore).
2. How to Draw a Trend Line?
Mnemonic: Two points make a line, three points validate, if broken, change it.
Steps Breakdown:
Find two obvious "turning points":
Uptrend: Find two low points where the price dropped and then rebounded (for example, dropping to 100 on Monday and rebounding, then dropping to 110 on Wednesday and rebounding).
Downtrend: Find two high points where the price rose and then dropped (for example, rising to 200 on Monday and then dropping, then rising to 180 on Thursday and dropping again).
Note: Select the price's body (the main part of the candlestick), not the upper and lower shadows (wicks), as those may be false signals.
Connect the points:
Use the drawing tool in trading software to connect these two points, extending the line diagonally to the right (to see if future prices will touch this line).
Example: If Bitcoin rises from 10,000 to 12,000, with two drops to 10,500 and 11,000 both rebounding, connecting these two points forms an uptrend line.
Validate:
If the price touches this line for the third time and rebounds, it indicates that the line is reliable.
Counterexample: If after drawing the line, the price breaks through without looking back, it indicates a mistake in drawing, and you need to find new points.
3. How to Make Money Using Trend Lines?
Core Logic: Buy on the line, sell below the line, reverse on breakouts.
Specific Operations:
Going Long on Uptrend Line:
Entry Point: When the price drops near the trend line and shows a stop-loss signal (like a long lower shadow or a bullish candlestick).
Stop Loss: If it breaks below the trend line (for example, if the closing price is below the line), immediately stop loss.
Take Profit: Wait until it reaches the previous high resistance level, or if the trend line becomes steeper (a rapid rise may indicate a pullback).
Going Short on Downtrend Line:
Entry Point: When the price rises near the trend line and shows a stagnation signal (like a long upper shadow or a bearish candlestick).
Stop Loss: If it breaks above the trend line (closing price above the line), immediately close the position.
Take Profit: Wait until it drops to the previous low support level, or if the trend line accelerates downward (may indicate a rebound).
Reverse Operation on Trend Line Breakout:
Example: If Bitcoin has been following an uptrend line and suddenly breaks below it without rebounding, it may indicate a trend reversal, and you might consider going short.
Note: There are many false breakouts! Always wait for the closing price confirmation, or act after a retest of the trend line (for example, breaking below and then rebounding to the trend line before dropping again).
4. Special Attention for Contract Trading!
Don’t use full leverage:
- Trend lines are not 100% accurate, especially in the volatile contract market. Choose appropriate leverage based on margin to avoid liquidation from a false breakout.
Look at larger time frames for stability:
- Trend lines on 1-hour or 4-hour charts are more reliable than those on 5-minute charts (short time frames are easily manipulated by major players).
Combine with simple indicators:
MACD: If there is a MACD golden cross (bullish) or death cross (bearish) near the trend line, the signal is more reliable.
Volume: A breakout with increased volume may indicate a true breakout; a breakout with decreased volume is likely a false move.
Don’t hold on stubbornly:
- If the trend line is broken, don’t fantasize that "it will definitely come back." First, stop loss, and wait for the market to clarify before acting.
5. A Practical Example
Scenario: ETH/USDT 4-hour chart, uptrend.
Draw the line: Connect two low points (2000 and 2100) to draw an upward sloping line.
Entry Point: When it drops near 2200 (the trend line position) for the third time and shows a bullish candlestick rebound, buy.
Stop Loss: Set below the trend line at 2180.
Take Profit: Previous high at 2500, or sell in batches when the trend line accelerates upward.
Result: If ETH rises to 2500 and then breaks below the trend line, close the position for profit; if it breaks below 2200, stop loss and incur a 2% loss.
Summary
Trend lines are the "curbs" of price; price movements follow this line, and breaking it may indicate a turn.
Drawing lines should be simple: connect two points, validate with three, and avoid complicating things.
Operations should be decisive: buy on the line, sell below, and don’t go against the trend.
Be cautious with contracts: use lower leverage, focus on larger time frames, and avoid greed.
With a few days of practice, you too can quickly identify the "roadmap" of price!
【4.15 Price Trend Analysis】
The hourly chart of Bitcoin shows the price fluctuating between 84000 and 86000, forming a relatively stable oscillation area within the Bollinger Bands, indicating some selling pressure and buying support in the market. The short-term trend is clear, mainly oscillating, with high selling and low buying. Ethereum operations can synchronize with Bitcoin.
Bitcoin Operation Strategy
8.5-8.6 short in batches, stop loss at 8.65, target 8.35-8.28;
8.25-8.35 long in batches, stop loss at 8.2, target 8.5-8.65.
Ethereum Operation Strategy
1635-1670 short in batches, stop loss at 1690, target 1580-1530
1540-1575 long in batches, stop loss at 1520, target 1630-1660
【The above analysis and strategies are for reference only. Risks are to be borne by the reader. The article's review and publication may have delays, and strategies may not be timely. Specific operations should follow the real-time strategies of Bitcoin Bear.】
(Note: 📣 Due to the limited timeliness and depth of information on public platforms, the market changes rapidly. Key turning points, precise operational strategies, and sudden risk alerts need to be synchronized in real-time on (public account - Bitcoin Bear). Here, you can receive: real-time strategy updates, in-depth analysis support, interactive Q&A, and risk warnings and optimization suggestions for personal holdings. 🚨 Remember: the market always rewards those who act faster and have more accurate information! Be a winner among the minority.)
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