What is a horizontal line? Learn the basics of line analysis! - Horizontal Line Part 1 - 【Line Analysis Basics Lecture #1】

Hello! This is SAKU!

Until now we have been delivering the MTF (Multi-Time Frame) analysis, but from this time on we will move intoline analysis!

Even beginners in line analysis should firmly learn from the basics!

In line analysis, many kinds of lines are used, but personally the first thing to master ishorizontal lines!

Therefore, for several sessions from now,horizontal lines will be discussed, and for the very first installment we will introducehorizontal lines,what horizontal lines are and how to draw them!

What are horizontal lines

　Horizontal lines, as the name suggests, are lines drawn horizontally on the chart! (Dun!)

Regarding their role,they can help determine the direction of the trend, trace the footprints of buying and selling pressure, identify turning points for buy/sell decisions, and form future expectations from those traces,and other similar roles can be considered.

Where should you draw horizontal lines?

You can draw horizontal lines almost anywhere and as many as you like, but commonly observed horizontal lines include the following:

・Lines drawn at notable highs and lows
・Lines drawn at swing highs and swing lows
・Lines drawn at round numbers
・Lines drawn at the upper and lower bounds of a range
・Lines drawn at levels where resistance or support reverses
...and so on
Let’s go through them one by one!

・Lines drawn at notable highs and lows

Notable highs and lows are the standout highs/lows that catch your eye when you glance at the chart!

These areas help gauge how far the price might move and how far the current price is from those highs/lows.

It's good to draw horizontal lines at these points for now.

・Lines drawn at swing highs and swing lows

Swing highs/swing lows are already discussed when talking about trend cycles, so you should have mastered them by now!

If you’re not sure yet, refer to the article on the definition of trend and make sure you understand it well!

Swing highs and swing lows are turning points in the trend, so many people pay attention to them.

Also, past swing highs/lows can become points of attention later on, so it’s good to draw horizontal lines for them as well.

If you draw lines at swing highs/lows,you should not just draw them; be aware that those levels signify either the end or continuation of the trend.

・Lines drawn at round numbers

Round numbers are clean numbers such as 150, 155, 160, etc.
Lines drawn at these clean numbers are often watched with awareness.

The reason is that, except for market orders, many actions are taken at clean numbers. Limit orders are often placed at clean numbers, right?

This is a bit of an aside, but leveraging this property, when placing stop orders with a reverse trigger, you can reduce being caught by avoiding clean numbers as a technique!

・Lines drawn at range upper and lower bounds

In ranges where price moves within a fixed width, the upper and lower bounds of that range are often watched to see whether they are broken as turning points.

Also, for ranges that have been watched in the past, in many cases the price will continue to churn within that range width in the future as well.

・Lines drawn at resistance/support reversals

I’d like to skip explaining resistance and support for now and cover that in the next installment!

Let's actually draw horizontal lines!

Let’s actually draw horizontal lines on a chart to see what they look like and how they are perceived!

Here, we drew lines at notable highs/lows and round numbers!

There are quite a few lines drawn, huh.

In the next image, we marked the parts where the drawn horizontal lines are being watched with a circle!

Can you tell?

The blue (bull) phantom in the top-left of the screen is not there...

Rather, you can see how price moves react to the horizontal lines drawn at highs/lows and round numbers!

In this way, drawing horizontal lines makes price levels that are being watched, or likely to be watched, visible, as well as turning points or traces of buying and selling!

For now, we’ll stop here after explaining the main places you can draw horizontal lines!

This horizontal line is among the basics of line analysis, so please start drawing horizontal lines on your own chart and practice, or think about various aspects!

What’s important in line analysis isnot merely drawing lines, but understanding what intention lies behind them, what awareness you are looking to gauge with the line, and what kind of reactions are occurring!

If you found this article helpful, please like it or give it a♡! It’s encouraging!

For those who want to acquire more advanced and practical line analysis trading from the basics, see below

The Essence of MTF Multi-Time Frame Analysis