Trend lines are a tool that I use every day in my trading. Trend lines work on all times frames.My favorite time frames when looking for stocks are the 2-year daily charts and the 20-day 15 Min charts. Why? On the daily chart you will have major support areas that you can use to draw a trend line from one point to another point, and then on the 15 Min charts you can find great entry points by drawing trend lines.
Now one secret is when your 15 Min trend line matches up with the daily trend line on the same chart it will signal a buy or sell signal. Below are 2 charts that I have drawn trend lines on, the first chart is of a daily candlestick chart where I have connected 3 previous higher swing lows. The second chart is of a 20-day 15 Min chart where I am looking for a low risk entry.
As you can see, both trend lines from the daily and 15 Min charts match up at the same point, which is giving me a buy signal and lets me know that my odds of winning are much greater. The reason my odds of a winning trade are much greater is because if price comes to the trend line on the 15 Min chart, then everyone who is looking at the 15 Min chart will see a buy signal and everyone looking at the trend lines on the daily chart will also see a buy signal at the same price point. Most professional stock traders look at daily charts and 15 Min charts for their entries, even if they are Day Trading.
Another secret: when you draw a trend line, always extend the right of the line into the future because when price pulls back it could use that same trend line as support later on in the future.
Trend lines are one tool that once you master using them, you will wonder how you ever traded with out them.
Trade safe and happy trading!
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