Hey, what's up guys? Well, it's time to talk trendlines And I'm here today to help you remove the guesswork of drawing all different types of trend lines to help you pinpoint Bruce's and entries to help you identify trend to signal a trend reversal. All these items can be really useful in your training to help you maximize your profits. And today I want to show you a really powerful tool and provide you guys with the ultimate guide to establishing these high probability trend lines. So let's take a few minutes and break down what it takes to establish high probability trend lines.

All right, what's up guys? time for some trendline talk here today and we're going to talk about how to establish the highest probability trend lines. And I know that most of you are probably familiar with trend lines and you've probably drawn a few. but what I want to bring clarity to is that trend lines can be very subjective and that's you can draw several different lines and really not be sure which one is the right one to trade off of or what to expect once the line breaks, or how to even approach a trend line that's breaking and what to expect thereafter. So what I'm gonna do today is remove that subjectivity so that you know when you're trading off of one of the trend lines that you will be drawing from here on out, you will be able to expect a measurable move and you can count on that line being very valid if you follow the very simple criteria that I'm gonna provide you with here today.

Alright, so we're gonna take a top-down approach and start with looking at the daily chart where we establish all of our major support or resistance and we're gonna work down towards our trading time frame which is can be as fast as 15, 20, 30 second charts to trade momentum. And while trend lines can be used to establish support and resistance, they also can be used to establish precision entry points. They can be established to know when to exit a trade or to stay in the trade. and I'm going to show you several examples of each.

But what's most important here today and what you use through all of that is how to establish those proper lines and what you're going to utilize in order to create those lines. All right and just starting off what is a trend line from a very basic point of view and a trend line is simply a point of support or resistance that is on an angle. All right. We have supported resistance that you know most most traders are probably familiar with that are on a horizontal basis.

Alright, so a recent high if something would be resistance, it's typically established on a horizontal basis. But a trendline follows a trend and it establishes support or resistance on an angle. So the only difference is that the supportive resistance is on an angle as you see here, identified by my blue lines and my trend lines will always be blue. So I know the difference of when I'm looking at a chart.

If I'm seeing a red line, I know it's horizontal. If I see a trend line I'm sorry. If I see a blue line, it's going to be a trend line level. Okay, so we're going to talk about here today is what are we're going to use to establish those lines? How do we draw them effectively? Best-case scenario: trend lines.

Some imperfect trend lines, but sometimes that does happen. Nothing is exact, especially in trading or mostly working with a zone and then obviously how to utilize these lines once they are established. Okay, so again, trend line is simply a point of support or resistance that's on an angle. It's going to establish either an uptrend or a downtrend which is going to originate with swings in the market.

And that's where we're going to start off talking about today because that's where we have to use to anchor the origination points of the line. So when we're looking at a chart, we need to figure out where the anchor points will be for this trendline that we're going to draw. And the way that you do that is you simply want to look left, right, look as far left as you possibly can. on chart.

you can see the chart that I have up here on the screen. We're looking back nearly 20 years worth of data here to try to find the most significant swings in the market and the further that you can look back, the more valid your lines will become and that they have more interactions on them. All right? And what we're looking for here is the most significant swings in the market. So we you can see we look back 20 years We see we have a big swing high in the market back here in early 2000.

All right, if we move forward, there's really no other swing point in the market that is established until we get well over here in late 2015. and what I did is I used this anchor point over here this swing high in the market and I connected it to this swing high in the market and I extended that line out to the right. Now what we want to do is once we extend the line out after we've got our two anchor points in the market is see if there's any more interactions on the line and if that line is being respected because that's ultimately we're looking for, Is the line being respected? Okay, you can see that there definitely is another interaction with this line as we come back into it and test it right here. and we actually reject off of it and pull back.

but then shortly thereafter we push above the line, we start to break out on volume. Okay, that's a confirmation technique that if you start to break out of one of your trend lines and volume comes in, then you know that you are definitely working with a very valid trend line. And you are not the only one that is working with that line. that's is essentially going to provide you with a very measurable move.

A very predictable move, and that's what we're looking for as traders is obviously predictable moves that create low risk opportunities. And by utilizing these these very valid lines, you're going to see many of these opportunities in front of you to take advantage of, so you can see what happens here. We have those two anchor points that we established by using the most major swing points in the market, and thus we've created some descending resistance. All right, descending resistance is going to be high on the left, too low on the right, so it's gonna be in a descending fashion and this is what we'd be able to create right here.

And you can see once the stock breaks up above that descending resistance or outside of the trendline, look at the type of move that you get a pretty impressive momentum move to the upside once that line breaks. Okay, so again, all we need to do guys is simply identify the most major swings in the market to begin anchoring our trend lines. And that's what's going to give us the most valid points of support and resistance as far as trend lines are concerned. Now, how many touches are you look for when you're establishing trendline? Well, you obviously need to write to to establish a line, but I like to see three or more take place in order to fully validate that line and give me some confidence that okay, we are actually seeing a very well-established trend here and I can I can utilize this line to trade off of if we do get an actual break.

Okay, and trend lines on the daily are often going to be very well established once you get multiple touches. and this line obviously you can see has one, two, three, and then four over here before it breaks out, which is the fifth one. That's why this one works so well because you had multiple touches and they were all major swing points in the market. Okay, so again, very simple and straightforward.

We don't have to over complicate this as trend lines typically are. All you really need to do is look for the most major swings in the market and start connecting them. And when you start to see some consistency in reactions to the line, then you know that you have a valid line. and the next time the stock interacts with that point, you should see a measurable reaction.

And as day traders, we want measurable reactions because that's where we're able to make our profit from. All right. So if we look at the down side of things, if we look for the most major swings in the market starting from the left and we look to the right, we can see that. Obviously you know this is kind of a low down here, but if I start with this and this is going to happen, but you need to just work your way forward until you find those anchor points that you can utilize that are going to give you you know validated lines.

So if we start with down here, we can see that this would be obviously the next swing point, but that's way out of out of range so that's not really gonna do us and these provide any value to what we're doing so we're gonna move forward. Obviously the next most major swing low is gonna be down here. all right. So if I utilize this point here, try to make a line that has multiple touches.

well that's probably going to be somewhere in through there, but again way out of range not gonna provide any value. So what do we do? We continue to move forward and you can see that's where I got this third line from or the next line that I drew where we started to get some nice touches in through here. We had one, two three and this was a big reaction to this to this line. Here you can see the volume that came in when you touch the line.

so that's one thing that I want to talk about here for a moment is that if you have a stock that is coming into a very major trend line that you have drawn off of major anchor points in the market or major swings in the market and you have a volume reaction to that, you can definitely count on that your line has been just that much. further validated in that that level is holding alright. If you see volume come in as your stock as the stock approaches a line, then that's going to further validate your line. And that's something that's really important to understand when drawing your lines because some at some points in the market you may have an anchor point that has really high volume and that is.

That is something you definitely want to incorporate into your trendline analysis. So for instance, if we had a swing high in the market at an extremely high volume, then we definitely want to incorporate that into your trendline analysis because that's going to be a very valid point to utilize for an anchor point. All right, And typically what we were looking for on the daily timeframe as you can see here is some sort of pattern. All right trend lines will often establish some sort of pattern on the daily that we can trade off of.

and in this in this example, you can see this is essentially just a big wedge. that is, you know, prices is contracting until we actually break through that trendline and then price expands again. All right. So from a daily standpoint, we're looking more of a pattern based situation here, where we're utilizing trend lines to again establish the trend and figure out where that trend is going to be breaking, to look for a potential entry point that we can dial down to on our fast timeframes to ultimately get in the stock for a trade.

All right. But again, it's very simple. It's very straight forward. You don't have to get, you don't have to over complicate it.

And you know, worry about drawing. You know 20 different lines to figure out which one is the right one. You know which point am I using, which line is going to be. The all you have to do is start off by looking left as you do with any sort of support or resistance, and from there, utilize the highest or lowest swing points in the market and then just work your way back to the right, find those anchor points, and then connect them and look for the consistency in the action.

Remember, minimum of three touches or more. Okay, is what you want to see in order to have a valid line that you can actually trade off of. All right. So a minimum of three touches or more.

Alright, so that is looking at it from a daily standpoint where we again, we find these lines to figure out if the stock is really breaking out of trend, if it's going to provide us a momentum type move, because the stock is either breaking down or breaking out, and these provide us with really great trading opportunities because we have such precision in identifying the support and resistance. Now, one thing I do want to touch on here is that you know don't don't don't try to force a trend line. Alright, don't try to force a line that's hard to identify. The most obvious is usually the best.

Okay, and once you start looking at, you know these charts on a daily basis. This type of stuff will start to just pop out at you without even having to draw a line. But you know, drawing a line makes it that much more clear. So just know that the most obvious points and that's why we're using the most obvious points, the high swings and the low swings to establish the lines or what is going to typically provide you with the best results.

Why? Because it's what most others are looking at, including including algorithmic systems, automated systems, right? They're going to look for the highest swings and lows, and they're going to utilize those to establish trends or patterns. And once those break, that's when you see the measurable moves take place. So remember, don't over complicate it and try to force lines that don't fit because you just won't get any results after the after that line has been broken. Okay, so let's dial into a faster time frame to show you guys exactly what we're looking for when we're trying to establish these trend lines.

and what I'll refer to the lines as on my faster timeframes refer to them as speed lines just because they're much faster based lines and they provide us with entry signals, exit signals establishing trend. They're used in much more of a day-trading sense to help us identify the the right points that we want to be working with when entering or exiting trade. Ok, so one thing to note here at the right before we get started is that you know trading is. you know it's it's it's definitely not a science.

Everything is going to be a zone. You're rarely going to see support or resistance hold to the penny. It happens, but it's very rare. Everything is based much more off of a zone.

all right, So don't expect the trend lines to fit absolutely perfectly. As long as you have a zone of support or resistance established in your anchor points then you can. You can rely on the fact that you you have a valid line right. What you don't want to do is not draw a line because you don't get exact touches on it several times.

right? A little bit of leeway here and there is okay. a zone and trading is okay. that's how supporting resistance works. okay so let's look at a stock here that made a hard move down to a hard move to the downside and show you how we can utilize a speed line in this scenario.

So if I look at this stock, what jumps out at me right away is the initial is the initial swing high on it which is at the high. alright. so what I'm gonna use is I'm gonna utilize that point to start with and then I'm gonna look for the next most major swing which is gonna be right here. Okay, this is the next most major swing.

We get a little bit of a retest here after a hard move down and if I can connect those two points and see where we go there after, that is the point that I want to use for my trend line. So you can see here that multiple touches on this line. we ride this line really closely all the way down and then what happens once we break outside or on the other side of the trendline, we start to back test it and then we move higher alright or the current trend. the prevailing trend has been exhausted.

You could see here that I'm using somewhat of a zone for the the the trendline and as I said earlier that most of the most of the time trend lines or supportive resistance will be a zone but you want to be as exact as you can. but just understand that zone is okay to use to establish the line. And remember we said three touches minimum. Well we have one, two up here alone three and then several and through here more and through here.

So we got a very valid line here that's established in trend. To the downside. So being that we would be in this trade to the short side, we would want to know when is the right time to fully exit the trade. Alright and the right time to fully eggs of this trade is when that trend is broken and we get a pivot or the backtest above that line and you can see here once it breaks above the speed line it comes back it holds a slightly higher low.

That's gonna be at a point in time where I'll be exiting the trade completely if I have anything left. Okay so again using the initial swing high and then looking for the next most Majors point which is gonna be this one Here we extend that out and we get a really nice line. The stock respects it all the way down until we get the break above. A little bit of a backtest with a higher low, that's gonna be the exhaustion point of the trend.

It's time to exit. Okay so let's say you're watching this trade and it's starting to sort of kind of consolidate. You're trying to figure out where it's the best entry. Is it up here? Is it back through the low? Is it back below this pivot Where where is the right point to take an entry? Well, you simply just establish a trendline.

All right. So you start with the this most major swing in the market as we talked about which is gonna be the low down here and we establish the next anchor point to the next most major swing which is if we look right it's gonna be right here. Okay, so now we've got a little bit of a sending support in the form of a speed line and that's gonna tell us that once that trend breaks that is gonna be a point to where we would want to look to potentially riad back to the trade and look for a continuation to the downside. All right now.

one thing that I really like about utilizing these trend lines is if you have a point of support on your chart at the same spot as a trend line, you often get really nice results or very predictable moves. And that's what we have occurring here is this white line is a major point of support on the daily and that's why we kind of stopped around this point and we're kind of chopping sideways. We're holding the support right, but now the fact we have that support, it's aligning with our short-term speed line Because we used our most major swing point is the low to the next one. We extend it out.

so if once we get a third touch on this, we're gonna look for a fourth touch and potentially a break. So as we move forward, there's the third touch right right to the line to the penny and we start to consolidate a little bit. And then we start breaking both the trend line and the and the pivot point of support. So look what type of move starts to occur.

Once you break through that point and look at the volume that comes in. Remember what I said about volume. If volume comes in on the break of your speed line or trend line, you have a very valid line and you can most likely expect that move to keep continuing in your favor. Alright, so as you can see, we broke the speed line again.

that's your entry point to re-enter the trade and from there you just continue to move lower throughout the rest of the day. All right. So a really good example of how to utilize not only a speed line or a trend line to remain in a trade until it's fully exhausted, but also how to enter a trade, re-enter a trade that has potential to continue. Okay, so a good example there of how to use speed lines, how to connect the most major swings in the market to get the most accurate line.

Okay, so let's look at another one. take a look at, take a look at Twitter So if we look at Twitter here we'll see a day that this thing was selling and we'll talk about a trend line that we used on it probably still is drawn, but we can redraw. So if we look at Twitter here it's the day that the stock was selling and we wanted to know when this trend was gonna be fully exhausted. Alright so here we take a look at the chart and we look again.

Let's say we're trading this in through here and it's It's 15 minutes into the open of the day. Now we look for the most major swing. Well the most major swing. To start with, it's gonna be up at the high.

We're gonna connect that to the next most major swing which is going to be in through here. The reason I'm using this point right here instead of this point is because I get two touches right? I get two touches up here I get a touch here and a touch here and then if we extend that out, look what happens. We ride that line all the way down staying just below it and then as we start to kind of flatten out here, we start to break back above it. We come back, we back test the line and we hold.

Okay, that's gonna tell me if I'm still short this stock that I will exit my full position because the trend has now been exhausted and we've now shifted direction and you can see we just start to kind of move back up sideways and not really much movement. That was the end of the move. that was the end of the move all the way down to the bottom. Within a few cents of the low of the day, that trend line gave us the signal to exit the full position of the trade.

Okay, so really important how to identify the swing points in the market because again though, it's gonna give you the most accurate points to utilize to trade off. Oh okay so again really good example on how to use a line to keep you in a trade and to tell you when the right point is to exit. Now let's say that you didn't get this move out of the open on Twitter Okay let's say you didn't get this move out of the open on Twitter but you're kind of sitting here waiting to see kind of. You know where the right point is to enter on.

Maybe a retest of the you app? Maybe a retest of the of the speed line that you have drawn? Well let's say that you now have your speed line drawn but you want to know the entry point that where the stock begins to start to break back down. Okay so you're sitting here, you're waiting to the consolidation. You don't want to get chopped out. Now again you most major swing in the market which is gonna be down here at the low.

come up to your next most major swing which is gonna be right here. Now you have a speed line established in the form of support. so if that if that top trend line holds as resistance and you start to break the support, that's your entry right? That's your entry. A break through the a sending resistance speed line.

So we started consolidate, hit that line again, start to come back through. We break all right. So now you're sure you don't have to wait till the lows are taken out. You utilize the swings of the market for you to take a trade.

Alright and here you can see we start to we start to fade. Get a really nice move down. So these these trend lines can be used in so many different situations. If you know the right points to be looking at, they can get you into precision entry trades with very low risk and that you can see right there can be use as an entry if you didn't get the entry out of the open.

All right. So good example they are on Twitter Let's take a look at spot SPO T Another good example here. we'll talk about some trend lines on this one. You can see that I had it drawn on this trade as well.

We'll go ahead and remove that and start over so you can see what I how I drew this Now when we have a stock that's moving out of the open What? I typically I'm going to do is is is going to try to find the again the most major swing or Anchor Point the market and when you can see we had a little bit of a dip here. To the downside, and I've been always going to start with that. Always going to start with this here and see if we can identify some sort of trend or some sort of line that gives us multiple touches. Well established price action, but you can see here: I really don't have that.

I don't have a situation where I can get multiple touches if I establish a line right. So what I'm gonna do as I start it to the left I'm going to move to the right to the next most major anchor point and what's that going to do That's going to start us right here. This is the next most major swing. so I'm gonna start from this point basically the bottom of a pullback.

Now I'm going to try to figure out where we can get some sort of price action that it looks like we have a trend. Now if I do this right here, this looks like we have a trend because we get the pullback. This pullback sells right to the line, another pullback right to the line, almost to the line in through here. A lot of consolidation right at the line here.

we're still riding it pretty good and then we start to break up again. Alright, we break up to the upside again. so if we now we look out to the right if I'm long this trade I know where my eggs it's gonna be. Once this line actually breaks and potentially even a reverse that a reversal trade.

Alright, so if we look at where this line finally breaks, you can see it breaks here and then it starts to revert back down towards the the former support. So we look, we look at what happens and look what happens. Once that line breaks right, the trend is now over. So if you're long this you have now exited your position and potentially considering a trade to the short side which this thing drifts from 141 down to 137.

Pretty sizable move. Alright, there's something about this trade too that is very important that we talked about. Another one that I showed you is that if you have a pivot that falls roughly at the same point as a trendline, one of your speed lines for entry point is really valuable. So you can see here that we have a really nice pivot point in that we're holding this support level.

We come back, move up, come back again, test test test. and then we break break the speed line. Who break the pivot, we start to sell a little bit. come back with back tests, look at that right to the penny and we back test that line and then we start to sell again.

Okay so again, really important. These speed lines are super effective if you are not looking and and are able to identify the right anchor points of these lines. All right one last one. Roku Everyone knows Roku We'll take a quick look at this to show you an example of how this one was established.

So what I'm gonna show you on this one is the potential to draw multiple lines and take multiple trades. If you're a fast trader, if you'd like to trade in and out a lot, there's potential to take multiple different trades in several different situations. But here's an example of a trend. that's you know we used to.

we used on Roku to keep you in the trade if you were to long side. Now if you were a fast trader and you really wanted to utilize these speed lines all day long, you definitely could. Alright so for example, if we start at the at the opening swing low alright we connect it to the next one. So the next most major swing which is right here can see ride that trend breaks.

Alright, there's a couple point trade in there. Alright now if you establish a speed line here, write down all the way. All these touches, it breaks. There's another couple points back to the up side.

Alright, you can continue to do this on so many different situations and I use on a very short time period like this. If I'm momentum trading out of the open, I will use it to find entries that I would otherwise most likely not see right. I would utilize it in many different scenarios to get entries and quick entries. If you have a lot of momentum, you can use these short term speed lines to really get you in at the precision points.

And when you're trading quick moves like this, it's important to have the the most precision entry point because you don't typically have a ton of room to catch a big move. So if you can get those precision entries, that's gonna make the whole difference. Alright so again, you can start off the day by drawing very steep speed lines and using them to catch quick trades but in both directions. and then once the day starts to play out a little bit you have a little bit more data.

Then you can start working with establishing a little bit longer term speed lines and that's what I did through here. I Use the this this point here and connected it to here and you can see look what happens over here comes all the way back to this line and test it to the penny and continues to bounce back higher. All right. But so many different situations you can use these these speed lines and trend lines.

But again, what's most important guys is that you utilize the most major swings in the market. Okay, most major swings in the market is what is going to produce all these high probability lines that I just you and that will help you identify the precision entries. No signal reversal points. it'll signal exhaustion's of trend and you can be a very very precise trader.

And I would encourage you to try to utilize it on a faster time frame because you're going to see very accurate data in basically the price, action and price action is king. It will tell you the story. If you can learn to read it and utilize these speed lines while reading it, you will be you have a significant edge right on this trade you can see could use these speed lines to get entries all over the place. Quick entries all over the place, right? so you can use these all over the place to pinpoint entries left and right if you're a quick trader.

Every time one of these speed lines breaks you're in right and in and that's a lot of profit to be happy if you can utilize them in the right way. So in events I wanted to share with you guys just a few minutes today how to establish the highest probability trend lines. Remember, run through the criteria one more time. Remember that you have to have minimum of three touches when you're drawing the longer-term lines.

You also want to utilize all the price action that you possibly can try to utilize the Wicks: Remember that it will often be a little bit of a zone don't expect it to fit exact every time and definitely always look left. Make sure you're utilizing the highest and lowest swings in the market and you will be producing the most probable and highly profitable trend lines. All right. So I hope you guys enjoy this.

You have any questions or comments? leave them below. I Definitely will be happy to answer them and help you understand a little bit more clarity. So everyone definitely leave a comment below and happy guys! Took some time to watch today. Hey everyone, thanks for watching the videos! I'll continue to make sure that all of the watch lists as well as the recaps are available to all of you.

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