1) Drawing trend lines on multiple timeframes can help determine the overall trend direction and potential trade entry points, even if some timeframes show conflicting trends. 2) Trend lines define the relationship between swing highs and lows and can indicate whether a trend is accelerating or decelerating. They provide targets and alerts for potential trades. 3) Using trend lines from higher timeframes provides important context for trades identified on lower timeframes. Trades should follow the larger trend direction.

1. Multiple Timeframes and Trend lines
http://www.netpicks.com/multiple-timeframes-and-trendlines/

2. Multiple time frames analysis can be
overwhelming for some. In one frame,
we are in an uptrend while in another
time frame, we are in an downtrend.
Add in more time frames to check for
"confirmation" and confusion can
become so severe, people tend to
simply freeze.

3. The issue is that there comes a time
where the time frames mesh and
either the higher or lower time frame
takes over. Patterns in one time frame
take on a whole new meaning when
looked at in the context of another
time frame.

4. There is the belief that the higher time
frame carries more weight but
remember at any time, one time frame
can take over and a turn over happens.
The trick is to determine which time
frame and structure is the one with
more power.

5. In this piece, I want to give you:
- How to draw different trend lines
- How to determine trend
- How to trade counter-trend using
trend lines

6. Since the trend on one time frame can
become the dominant trend at any
time, it's not a bad idea to see where
we are in the bigger picture.

7. Trend lines are good tools to use for
trend determination and in the right
hands can become a stand-alone
trading tool.

8. Not only can they help determine your
trend direction, they can also point to
the rate of the trend which is great
information to have in terms of taking
a trade.

9. In defining how to draw a trend line,
we open an entirely different issue.
Connecting swings in price can be
subjective especially if we include
internal trend lines. The key is really
to be consistent at every turn when
you draw the lines.

10. This is the standard way of drawing
trend lines and because we are using
the same anchor for different swings,
this is known as fanning a trend line.
Trend lines define the relationship
between the swings that are used and
are useful to determine an
accelerating or decelerating trend.

12. 1. You can see how the lines start off
steep and slowly begin to decrease in
the steepness of the line.

13. 2. Smaller trend lines marking off the
corrections are short term trend lines
and can be useful in determining a
trade entry

14. 3. Internal trend lines also offer
opportunity in terms of trade
opportunity as they can be useful in an
early warning of trend reversals

15. One way you become more objective
in trend line usage is to only connect
to obvious swings and only after a high
or low is taken out.

16. The drawing of trend lines is not very
difficult and now the question
becomes; how to use that information
to aid us in our decision making.

17. Drawing lines on the higher time
frame charts is simple as you have less
swings to deal with. The chart below
has a daily down trend using trend
lines (not seen due to space
limitations)and this is an intra-day
chart using the one hour time frame.

19. You can see we have a few more
options as the amount of swings has
increased.

20. Keep in mind this is the 60 minute
chart in the context of a daily down
trend. The daily down trend has been
determined by drawing trend lines
over obvious swing highs.

21. 1. These dashed lines used to form
down trend lines off and kept you on
the short side intra-day OR provided
targets for counter-trend trades. All
three have been broken.

22. 2. We started to get higher swing lows
which allowed us to draw up trend
lines off the lows. Each time price met
a down trend line, it gave inflection
points for possible action.

23. 3. You can see the lines getting
steeper indicating the rate of up trend
was increasing in the context of a
higher time frame down trend.

24. When trend starts to increase, you
can see the trend line is taking a more
sharper direction and in this case, we
may be seeing a resumption of the
overall down trend.

25. One thing I hope you have noticed is
that at each line, there is some type of
reaction. This does not always happen
of course but it's something to take
note of.

26. Often times when a trend line breaks,
it is simply moving into another trend
rate that is either new or has been
shown through an earlier trend line.
Keeping in mind previous rates of
trend plus the larger time frame trend,
can help keep you from being overly
anxious to jump into a move.

27. I want to dial down into each point in
time where price met one of the
dotted lines. Dropping the time frame
to a factor of four allows a better view
of the action and possible opportunity
around each point.

28. I have to reiterate that we are in a
down trend on the daily chart which
we objectively know through our trend
line. I also must add that if we
continue up from this current area,
there is not a trend line offering an
inflection point on the the previous
chart.

30. 1. After price breaks the lowest trend
line, it reacts off the upper trend line.

31. 2. After reacting at #1, price returns to
the break out price zone and offers a
trading opportunity.

32. 3. Price breaks through the tested
trend line and travels all the way to
another trend line before...

33. 4. Offering a pullback trade
opportunity off a formed demand line.

34. 5. Price breaks up through the tested
trend line and is now sitting at a make
or break point.

35. The point is that even though we are a
higher time frame down trend, usage
of trend lines offered not only a time
frame dependent up trend but also
trading opportunities.

36. In a future piece I am going to expand
on the usage of trend lines including
channels. For now, take it upon
yourself to lay out a trade plan using
the trend line information found
above.

37. It may not be a plan you trade, but it
will give you great insight on how
valuable trend lines can be for your
trading and may find its way into your
trading.

38. Trend lines can help you define the
strength of a trend, if a trend is even
present, and perhaps give you a signal
that the current move is coming to an
end through an parabolic push. Just
be consistent and clear with their
usage.