Understanding Cryptocurrency Price Trends with a Single Line: Trend Line Trading Rules

Do you often look at candlestick charts but can't understand what the prices are doing? In fact, you only need one line—the trend line—to simplify complex price fluctuations.

What is a Trend Line?

In simple terms, a trend line is a straight line that connects key price points. When the price is rising, it connects the low points of the bottoms; when it is falling, it connects the high points of the tops. This line acts like a “track” for the price, indicating whether the price is moving up or down.

How to Draw Reliably

Uptrend: Draw a line connecting the lows upwards, which is the support level. Prices typically bounce back here.

Downward Trend: Draw a line down from the high point; this is the resistance level. It will be quite difficult for the price to break through here.

Key point: At least 2 contact points are required to be valid. The more contact points there are, the more valuable this line is as a reference.

What is it for?

1. Confirm the Trend — The price has been bouncing off the trend line, indicating that the trend is still strong.
2. Find Trading Points — A price breakout of a trend line may be a reversal signal, indicating the timing to enter or exit the market.
3. Adjust Stop Loss — Frequent breakouts of the trend line indicate that the current trend is weakening, which should be taken seriously.

Better with Other Tools

Relying solely on trend lines can easily lead to pitfalls; combining them with indicators like RSI and MACD can help more accurately identify buying and selling points, making trading decisions more reliable.