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Trend Lines Don’t Line up on Different Bar Sizes

When you draw a trend line it needs to have two anchor points. A start time and price and an end time and price. If you draw a trend line on a higher time frame like daily bars they do not contain detailed information on what time the high and low happened within that daily bar, you only know the time of the open and the close.

In the example below we have a trend line drawn on daily bars from the low of March 28 to the low of April 5. Since we are using daily bars we can’t attach an exact time to the start of the trend line, so we assign it to the open of the day. Remember the only times we can assign are either the open or the close.

Once we change to a 1 hour bar size you can see the trend line doesn’t appear to line up anymore. This is because the trend line is being drawn from the open on March 28 at the low price of the day all the way to the open of April 5 at the low price of the day.

This applies to other chart drawings including Elliott Wave components.