Not sure what I'm supposed to see. Both lines show a down trend. I'm not a day trader, but what significance does that particular trend line have, being that it's on a one minute chart? The red is the line you would get if you used a line chart that plotted only the close. The yellow shows the actual highs that were reached. The question should be how do you use a trendline rather than does it work. What's with the blue dots?
I use trendline lines how they work. IOW I use closing prices, period. And ... over any trading period. Wicks are unimportant, a few traders - relatively speaking - who got caught before price reversed. Blue dots (and red ones) are reversal bars, LL's but closed higher in top 75% of bar range, vis versa for red.
Regardless of where you draw your line, the question remains how do you use them in your trading? I use them as an exit signal. Thanks for the explanation.
As with most of how I trade I use Tom DeMark techniques, so in the case of trendlines he has 3 rules for qualifying TL, and just as importantly disqualifying them, to fade them instead. I posted a pdf I came across a while ago in another topic laying it all out. But I have all 3 of his books so that is where I turn to.
The problem with annotating past charts is that one generally omits all the occasions where trend lines does not work and generates false signals.
Agree about "horizontal lines vs. diagonal".. the diagonal ones don't hold as often as a trader would like. However, they DO hold sometimes... and sometimes for significant moves... so players should be aware of them and be ready to play them when it "looks like they held".
Agree... Red Line is correct "Upper channel line doesn't appear to be drawn correctly"... actually, it's close. The channel is the blue lines. The channel would be just about spot-on if the upper line connected the actual wick highs and the lower line connected the actual wick lows. IOW, the channel was the right idea but was drawn "too narrowly."