Trendline Trading Strategy This is one of the most commonly mentioned trading. Concepts But how do you actually use these trend lines to improve your profitability as a Trader As Tech talk and short form content become more and more popular, we often see in these cool beautiful looking trading view charts with lots of lines drawing different angles and colors and the creators are probably telling you how simple trading is in their most exciting tone ever. flashing their cash money and Penthouse view Sorry, you're not gonna see those things in this video If You previously watched my trading strategy videos such as this, this and this that you know what to expect in today's strategy session. Welcome back to another humble Trader Trading Strategy video today.

I'm going to teach you an essential technique in trading how to use trend lines to improve your profitability. You're gonna learn how to use trend lines and why do you need them in your trading? Plan Three Quick tips to draw trend lines that actually work my large cap stocks, trend Line trading strategy and as a bonus, what you should avoid based on my personal experience no Lamborghinis here only real lessons and strategies that you can apply to your own trading. As a Trader You can apply this Trendline Trading strategy in both day trading and swing trading. so make sure to take notes, watch the video, and ask me any questions in the comment section below.

And don't forget to smash the like button for more trading Strategies videos. I Really appreciate it now. A Quick Trading 101 for my beginner! Traders What are trend lines and why do you need them in your day trading and swing trading? Trend lines can be a simple yet useful way to identify the direction of the price and a short-term sentiment. Whether it's moving up, down, or consolidating sideways, they can be upward or downward sloping lines or horizontal lines that are drawn manually.

Some Traders also use indicators such as moving averages or RSI to identify the trend lines. And not only do they give us information about the direction, they also act as support and resistance levels in trading. Trend lines are also great for executions as well. Traders can use them to determine the entries and the exits and use them to adjust the price targets based on how the stock is reacting to various trend lines.

you're looking at Tesla stock on the daily chart. Now when identifying uptrends, you want to look for a higher high and higher low. So what does that look like over here? Um, you can see from May to July almost August of 2020 the stock was kind of consolidating in this range over here. If we draw a rectangle here, the stock is kind of consolidating in this range.

You can see once the stock broke out of this range in this box, it broke out made a higher low over here 260.. this low is higher than the previous range around 250s, right? We're talking about 10 points higher than the low before and next it broke out of the previous high and went to a new high of three tens. this area and that's what we call higher highs. You can see higher highs and same as the lows, right? The previous support was 260s and the wedding broke out.

It pulled back, didn't go all the way back to 260s but rather around 280s. So this is what we call a higher high and higher lows and when you draw it with a sloping line instead, that's what it looks like. Over here you can see this new trend that broke out of the previous range. When you find out all the higher lows and the higher highs like we did before, that's when you get an uptrend on the stock.

Now we can do something similar with downtrend as well. The downtrends are usually followed by lowered lows and lower highs, so the exact opposite of the uptrend. So over here you can see once the stock are peaked out one two, three times around this three eleventh resistance, the stock eventually broke down below that 200 SMA and started making lower highs. What does that look like? You can see the previous highs over here 311s like we talked about over here and the next one over here is down here at 284s which is lower than the one before and you see similar things over here.

Once it broke down, sold off, two succeeds, broke down, the support went all the way down to 207s. That's a huge breakdown and next time it had a breakout and tried to Peak It was around the 237th area. So all these highs that a Tesla stock made is lower than the one before, this high is lower than the second one and the second one is lower than the previous one. Then that's when you get a downtrend.

line up the lower highs as well as the lower lows. Exact same concept, but now you see a downtrend for Tesla stock. And the second tip I have for you when drawing trend lines is that you want to make sure there are at least three contact points. In fact, you want to see as many as possible on the chart.

Looking at a Tesla example here, you can see the contact points for the Slime, one, two, three, four. So that's that's really good, right? That's even more than three. That's where you see the downtrend. Now for the uptrend.

it's a similar thing as well. You have the contact Point down here, one, two, three, another one over here, four and five. That's when you got the uptrend. Remember, you want to see as many contact points on the daily candles as possible when you're drawing trend lines on the daily chart.

Now if we slide a little bit over on a daily chart using this part of Tesla stock as an example, the next tip I have for you is that you want to look for extreme highs and extreme lows when you are drawing a trend lines. Now what does extreme highs and lows mean meaning that on the daily chart you want to look for candles either breaking out or breaking down That stands out. So in this example, over here on this section of Tesla's chart you can see the highs are that these breakout candles that you can see here these high you can see that it Formed extreme High over here and the stock sold out and the next time it broke out and made another noticeable High here. So you're looking for a noticeable point to break out and break down.

so one here you can see if we draw a box around the peak that's what it looks like over here, these ones and even this one down here as well. and here and then you have the next one that's extreme that actually stand out right that looks like an upside down V It's over here now. Same will be for the extreme lows as well. If you look at a chart earlier, we were looking for upside down V to look at the Peaks Now we're looking at the actual V shapes meaning that the extreme lows at the very bottom of the V.

So let's see you can see a V shape down here. This will be considered an extreme low over here so we can draw a box around that over here and you can see another V shape here. So this this wick on the candle that will be another extreme um, low that you can note as well. Over here and then down here you can see the lows are here and here which we noted earlier.

So when you line up all the extreme highs and the extreme lows like so that's who you when you get another trend on Tesla stock. In this case, this would look like a downtrend. So and really quickly here. I Want to show you that the same concept is applicable for intraday charts as well.

You're looking at a test at five minute time frame intraday so you can see that this low of the day is 170 the next low it made when it broke out and pulled back 171s. So this low is higher than the one before, same as the other one over here and over here 173, 175s. So when you line up all these touch points one, two, three, and four that forms a trend line. and also let's look for extreme highs and extreme lows.

you're looking at a V shape over here. you can see if you draw the shape of the candle that forms a V, this is extreme low. another extreme low over here. this is an upside down V So that's an extreme high.

So when you line all of these highs and all these lows, then that's when you get an uptrend intraday on Tesla stock. Now that you've learned how to draw trend lines on your charts, you need to understand how to read the lines and use them to support your trading plan. So I'm going to demonstrate this strategy that I personally use to trade large cap stocks such as Tesla Nvidia and many, many others. I'm going to demonstrate this trendline strategy in two different actions.

one is an uptrend while the other is on a downtrend. If you've watched and followed everything I explained to this far, this is a friendly reminder to smash the like button and comment down below any questions you may have. I'll do my best to answer you. Now going back to Tesla stock on the daily chart.

you can see that this stock had pretty much been downtrending since 2022. It made a high for that year around 380s and since then it's been selling off. You can see the blue line on some of the more extreme downtrends. I've identified 380 down the 360 and then went to a low of 220s, started consolidating like we showed earlier, went back and bounced to a high of over 300 and since then triple top around 315s over here One two three rejected that and started breaking down all the previous support.

You can see the previous support around this 280s over here. Once the stock peaked, triple top broke down to 80s and that's what it tested. the lower support around 230s and form this downtrend on this blue line over here and since then it sold off to you know, a low of 100 and 1 120 is over here. No, I think there's something interesting to learn from this Tesla chart you can see over here.

The last time it sold out from the peak went to all the way to 230, it spent like you know, a good almost two months consolidating in this range that we've drawn out earlier. It's consolidating in this range and when it broke out, that's when it formed a new uptrend right which we draw early in the uptrend from this area all the way to over 300.. now once that uptrend is broken and the stock sold off, you can see that we didn't really have any. Over two months of consolidation on Tesla stock we had a small one about, you know, maybe a little bit more than one month over here, but since then it stayed in a steady downtrend.

So what gets interesting is that once again, we're breaking out of this previous downtrend over here. You can see with the recent earnings that they did actually really, really well with all the new demands and price increase over here. for um, Q4 of 2022. that was the previous earnings report that was also a catalyst that propelled Tesla Stock to break out of this really, really huge multi-month daily downtrend.

You can see the stock sense then went from 140s to 160s and almost 200. Now there are two possible scenarios I see on Tesla stock. Either we pull back from this previous resistance here to retest the 160 Support over here this orange line that's the previous Support over here. Now the second scenario, if the stock does not consolidate sideways over here, is that it could also reject 200 resistance, break down that 160 support that we talked about and we test the lower end of the support from the previous downtrend.

this blue line. Here you can see there's some support around the 140 to 150s mark on Tesla over here. so this will be the next range I'm looking for for going long on my day trades as well as my swing trades and perhaps adding on to my investments for test stock. Now you might be thinking oh my gosh, Shea Why are you so bearish on Tesla Why do you think it's gonna sell off on 200 all the way to 150.

Well, let me show you why. An important concept when it comes to drawing trend lines is that you want to look at multiple time frames now I Know we looked at the intraday five minutes and the daily, but if you switch the weekly chart on Tesla stock, you can see that if I remove all the previous drawings over here and draw a new trend line, you can see lining up all the extreme highs that we said earlier. Highs here here and perhaps here and here. you can see that we're actually in a long term downtrend ever since you know 2022 like we talked about when you look at it on the weekly charts, it's a lot cleaner so that's why I don't think Tesla is going to break out of this 200 Mark right away I think a pullback would be much needed for Tesla stock.

Remember the areas I was looking at, the support areas are over here. you have a support 160. if you don't get that I think we're going to go back possibly to 140 and 150s area for the stock and that's a great example of how you use multiple time frames when you are drawing trend lines to support your trading thesis. So the next exciting stock we're looking at is Carvana CV and a on a daily chart you can see that this stock had been through a lot.

currently trading around 15 previously almost. You know, back in a year ago at 2020 it was almost like a 200 stock. Above it went to a high of all-time highs is 370 and since then it it hasn't had a great time. The stock had been through a lot of troubles in 2022 and now 2023 with a lot of layoffs.

The client used car sales and just overall business just not doing well fundamentally. So let's use all the same Concepts We learned earlier to draw the trend line on the stock. so let's see. Remember, we want to look for extreme highs and extreme lows.

We also want the stock to have touched at least three times to our line. So let's see from 2022, we have an extreme highs over here around 160. so you can see touch once and twice. now.

this High Over here this is an extreme area. You can see the V-shape over here. so you have the highs right here at these two points over here and over here. Now, once this thing's sold off from 140, pretty much it didn't have any extreme highs right? The next level we can really see is over here 54 dollars after it bounced off of 22.

when you're 54, pretty good. That's also extreme high on the stock and after that rejection, it's sold off even more. Since then, you had another small extreme High here around 41 dollars and then since then you can see recently it started rallying up to around twenty dollars. Okay, over here so let's line this up.

You can see all these Highs are obviously lower than the one before and there's multiple touch points one, two, three, four. Let's see if we can actually line it up to form a very ugly downtrend. So with the previous highs, you can form a downtrend and this recent High over here, it actually does not line up with any of our trend lines. So I think that's interesting.

Now taking a closer look over here, you can see the stock. You know once it's sold out from 140 down to 30 dollars this range. there's some you know support area right here. support area on thirty dollars below it, you can see one two three touch point at this lower level.

This is also around Twenty dollars. So what you can see here is that the stock. You know right now. even though we're not underneath the long-term downtrend, we're actually routing off the support of Four Dollars over here.

four or Five dollars. and when to test the previous Highs at Twenty Dollars. With a recent Fomc meeting showing some positive signs for the market and that inflation is probably has peaked out probably I think it's been great for the market which is what really propped up a lot of meme stocks like Cvna, Bbvy, and AMC So that's what cost the stock to Rally off from five dollars to eight and breaking out about that to almost twenty dollars. So this is where you actually have a short term uptrend on the stock.

and that's pretty impressive because we haven't seen it in a long time and a lot of investors are piling their money into the stock. However, I would remain cautious on buying the stock if anything. I Really like the speed test of the previous support level now becoming resistance at Twenty Dollars. Over here Again, Twenty Dollars.

here. this will be actually an ideal range for short selling stock. so I'll be more short buyers around this twenty dollars. Mark If we retest that, I'll probably look for a short.

However, if this thing breaks out of twenty dollars, even go to twenty one dollars, I'll stop out for a loss. Why? Because after twenty dollars, this is going to thirty dollars, right? The next level up is the resistance from the previous downtrend over here that we drum. So there's no way I'm gonna hold my short position from twenty dollars to thirty dollars. but these are the areas I will look to short sell the stock either as a day trade or a swing trade.

So that's a short idea and the strategy on how to execute right there. Remember I Always want to preach that you should respect your stops. So again, over 21 dollars stop out and wait for the stock to test. perhaps 28 or 30 dollars for the short.

Again, always have a stop in place I Think what you saw from Cvna, rallying off on five dollars to 20 is also a major short squeeze on the stock. A lot of people have been swing shorting the stock ever since the middle of 2022 and for good reasons that we talked about earlier. However, you also don't want to be fundamentally right, but technically wrong. Right now, the stock is indeed an uptrend.

Only time can tell whether the short squeeze is enough momentum for the stock to break their 20s and head to thirty dollars for me I Want to be cautious on the stock, but I remain pretty bearish overall and looking for a short at all these key levels at 20s, 28 and 30 dollars. Now, if you stuck around for this far, here are some bonus tips when it comes to the Trendline trading Strategy: What you should avoid based on my own personal experience after trading for more than eight years now. Tip Number one: Always follow the trend and the trend as your best friend. remember the CV and the example.

You want to make sure you are not fundamentally right, but technically wrong and always zoom out on the daily chart or the weekly charts like we demonstrated earlier. That's how you see the bigger picture for your Stock's Direction and use that to your advantage in trading. Number two: Don't over interpret the stocks that you draw. They do not have to be perfect.

Remember, technical analysis could be extremely subjective. You can see a downtrend on the daily chart as a swing Trader but another Trader who is an intraday scalper can actually see an uptrend for a long number. Three different Traders may have different perspectives on a chart depending on the time Horizon Trading style and different strategies I Hope you enjoyed this lesson on trendline trading strategy and how to apply it into your trading if you enjoy this video, please please remember to drop a like And subscribe and make sure to check out the playlist for even more free step-by-step lessons down below. Thank you guys so much for watching as always I'm the humble Trader and I will see you guys next time.