Lines of support and resistance are vital to many chart traders. This lesson will help TWS chart users learn how to add, reposition, and remove lines to and from charts, as well as covers how to apply Fibonacci lines.
For those of you who typically add so-called trendlines to help make buy and sell decisions:
- This lesson will show you how to add support and resistance lines to TWS charts;
- Show you how to reposition and remove lines from the chart area; as well as
- Demonstrate how to add Fibonacci lines to charts.
As with many features of TWS charts, there is more than one way to achieve the same outcome with our tools.
For example, while you can use the Edit dropdown menu to access the Annotation menu, with which you can add horizontal, vertical and regular trendlines, as well as Fibonacci lines, you can also bypass this process just by clicking on the chart.
After you right-click and select ‘edit chart’ to add a horizontal or vertical trendline, your desired line will be displayed, which you may reposition anywhere on the chart.
Simply by clicking, you’ll see the price value associated with the cursor displayed in the center of the line, which you can use as your guide for where you decide to release it – as a line of support or resistance.
You may want to remove or position this line or create another line parallel to this one.
To access the trendline edit mode, hover your cursor above the line – it will change color, and the cursor will also change to a pointing finger, signaling that, by left-clicking, you can drag the line elsewhere on the chart.
If you right-click, the edit menu will appear, where you can change line thickness or color, remove annotations, or remove the line or associated horizontal lines. You can even use the existing line to set an Alert.
Overall, right-clicking allows you to edit the chart and add a horizontal line.
Hover above the line and right-click again to open the edit function and you can add or reposition lines. Adding a parallel line to any trendline enables you to create a channel, often watched by traders as a path of support and resistance.
I will now activate one of these lines and select Remove All Annotations to clear the display of lines.
In order to add an upward sloping line beneath an asset’s price, I’ll position the cursor at the base of the bar, marking the start of the price climb, then I’ll left-click to turn the cursor into a crosshair; now I’ll drag the cursor to the end point and release the left-button to place the line.
Let’s activate this line by hovering above it, right-click to Add a parallel.
Then, reposition the additional line with your cursor to create a parallel channel.
For greater accuracy when adding lines, you may want to create an additional margin to the right of the chart.
To do this, hover your cursor above the small left-pointing arrow to the lower right of the chart.
It will change color as you hover directly above it.
Click left and drag to the left to create more space.
This will allow you to extend the trendline out into the future.
If you don’t see the arrow, you must enable Margin Area from the Settings Menu in Global Configuration. As a reminder, Global Configuration may be opened by clicking the TWS File menu.
Let’s now create a series of Fibonacci lines to a chart.
Technical analysts use such retracement measurements to project areas of support and resistance, once an up or downtrend is thought to have concluded.
To add this indicator, right-click anywhere on the chart and select Add Fibonacci Line.
You can see that the cursor image has changed.
If you are trying to measure a recent uptrend, position the cursor at the bar at the bottom of the uptrend, and hold the left mouse button down.
With the left click depressed, move the cursor to the top of the range and release the left click button.
The chart will populate with retracement levels using zero as the starting point and 100% as the top of the range.
You will see the popular retracements displayed on the chart, which are commonly thought to offer support and resistance.
To remove Fibonacci lines, right click and select Remove All Trendlines.
To dissect a downtrend, select Add Fibonacci line from the right-click menu, but this time start at the highest point on the chart, use the left click to anchor to the peak and hold the mouse key down and locate the bottom of the price action before releasing.
The chart will then display Fibonacci lines to depict potential retracement areas.
Now that you are familiar with adding trendlines of support and resistance to your TWS charts, let’s move on to the next charting lesson in Traders’ Academy.
Disclosure: Interactive Brokers
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