The line drawing tools can be used to draw trend lines, other (free) lines, trend channels or horizontal lines. Trend lines, trend channels and horizontal lines are all used as support or resistance lines.

To draw a trend line, you need two reference points (A and B). The reference points are positioned at pivots, for example at two highs (uptrend) or two lows (downtrend).

To draw a trend channel, you need a third reference point (C) that defines the distance of the second line from the first trend line. A trend channel essentially consists of two parallel trend lines that surround the trending time series. You can convert a trend line to a trend channel by setting the third reference point, and add action / reaction lines above or below the channel.

To draw a horizontal line, you only need one reference point that is positioned at the price level where you want the line to appear.

Free lines can be used for example to highlight significant chart formations that signify a trend reversal or continuation of the trend.

▪       You can change the color and style of the line(s), show the prices at the reference points or position horizontal lines at a specific level: See Customizing Lines and Trend Channels.

To draw a trend line or free line

▪       Click on the Free Line icon on the Drawing toolbar:

▪       Click on the chart at the first reference point of your line (A) and hold the mouse button down. To draw the line at an exact angle of 45°, 90°, 180° etc., press and hold the Shift key while drawing.

▪       Move the mouse pointer to the second reference point of your line (B) and release the mouse button.

Note             While you are drawing the line, you can move the whole line vertically without changing its direction: Press the Alt key after defining the second reference point of your line and keep holding the mouse button, then move the line to its final position.

To draw a trend channel

▪       Click on the arrow next to the Free Line icon on the Drawing toolbar, and then click on the Trend Channel icon:

▪       Click on the chart at the first reference point of your line (A) and hold the mouse button down.

▪       Move the mouse pointer to the second reference point of your line (B) and release the mouse button.

▪       Move the mouse pointer away from the trend line and click on the third reference point (C) at the distance where you want to position the second line of the trend channel.

To draw a horizontal line (support / resistance line)

▪       Click on the arrow next to the Free Line icon on the Drawing toolbar, and then click on the Horizontal Line icon:

▪       Click on the chart at the level where you want the horizontal line to appear.

To change the breadth of a trend channel

▪       Click on the trend channel to select it.

▪       Click on any reference point and hold the mouse button down.

▪       Press and hold the Alt key.

▪       Drag the reference point upwards or downwards to change the breadth of the channel.

▪       Release the mouse button to fix the new breadth. The direction of the channel will not be changed.

Note             You can also change the breadth of a trend channel with action / reaction lines (see below). The distance of all other lines is then automatically adjusted to the new breadth.

To convert a trend line to a trend channel

▪       Click on the trend line to select it.

▪       Click on the visibility point of the line and hold the mouse button down.

▪       Drag the visibility point upwards or downwards until a white preview line appears above or below the trend line.

▪       Release the mouse button to drop the line and create the trend channel.

Note             You can remove the second line to convert the trend channel back to a trend line by double-clicking the visibility point of either line. This only works as long as you have not added any action / reaction lines (see below).

Action / reaction lines

When you have drawn a trend channel, you can add action / reaction lines above or below the channel as additional support / resistance levels. These lines are drawn parallel to the trend channel at an equal distance.

Action / reaction lines have been introduced by Roger Babson in the early 90s. At the heart of the method is Newton’s physical sciences law that every action has an equal and opposite reaction. In its simplest form, the action / reaction method shows a trader when and where to add on positions if a market is in a strong trend.

To draw action / reaction lines

▪       Click on the trend channel to select it.

▪       Click on any visibility point of the channel and hold the mouse button down.

▪       Drag the visibility point upwards or downwards until a white preview line appears on the above or below the channel.

▪       You can drag the visibility point further to create more action / reaction lines.

▪       Release the mouse button to add the action / reaction lines to the chart.

Note             To remove (hide) action / reaction lines again, see Hiding and Showing Lines / Levels with Visibility Points.