Trendlines & Channels
"The Trend is your Friend." Trendlines help you visualize that friendship.
Drawing a Valid Trendline
You need at least 2 points to draw a line, but 3 touches to confirm a trendline.
- Uptrend Line: Connect the Higher Lows. Acts as Support.
- Downtrend Line: Connect the Lower Highs. Acts as Resistance.
Trendline Breakout Strategy
This is a favorite among price action traders.
- Draw a trendline that has been respected 3 times.
- Wait for a candle to Close forcefully beyond the line.
- Re-test: Conservative traders wait for price to come back to the line and bounce before entering.
- Direct Entry: Aggressive traders enter on the breakout candle high/low.
Channels
A channel is two parallel trendlines. Price bounces between them like a ping-pong ball.
Strategy: Buy at the bottom of the channel, Sell at the top.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.