eSignal Drawing Tools Overview

 

eSignal offers a wide array of drawing tools.  Recently new tools such as the Ellipse, Rectangle, Triangle and Polylines have been added. The ability to set alerts on the drawing tools and a price ruler to display price distance, percent distance, bar distance and slope is also available. Below is the list of drawing tools and their keyboard shortcuts.

 

 

Trend Line

The trend line drawing tool enables you to draw lines to indicate the direction of price movement, mark indicators' trending, define patterns and connect important analytical points in a chart. You can choose to draw the trendline as an arrow, price ruler, or a ray.

 

 

 

It draws a horizontal line that goes all the way across the chart. Useful to support and resistance lines in a chart. You can choose to draw a horizontal line with both ends extended, left end extended or right end extended.

 

It draws a vertical line from the bottom of the chart to the top. Could be useful to spot cyclical price movements.

 

 

 

Speed Resistance Lines are additional support and resistance tools used to help  define expected areas of retracement. Traditionally, the SRL tool uses 1/3 and 2/3 lines as the basis of the support and resistance, and the below chart on GE is a great example of this by catching the resistance points of an attempt to recover the uptrend in April of this year.

 

 

More recently, traders have begun to apply Fibonacci (0.382, 0.618) and Gann (0.25, 0.50) ratios with this tool, and even more support and resistance points can come out of this. Using the same example for GE but turn on the default Fib and Gann levels...

 

 

There is a breakout at point "A", support of a trend continuation all along the 38.2% line up until another breakout at "B", and a try for another breakout at the 50% line, which became resistance up until today's trading. The 61.8% line could be the next area of support here. 

 

The Pitchfork is a trend channel tool consisting of three lines. There is a median trendline in the center with two parallel equidistant lines on either side. This lines are drawn by selecting three points, usually based on reaction highs or lows moving from let to right on the charts. As with normal trendlines and channels, the outside trendlines mark potential support and resistance areas.

 

The below image is our modified Pitchfork that has the basis of its median (middle blue) line adjusted to 50% up the first two clicks. The example below shows the $INDU is caught in the channel for 5 months between the median and the first pitchfork "prong" (orange line). After it finally breaks in the beginning of April, it heads down to a 1.618 extension line (green), until it breaks at the beginning of May and the 3.00 extension has now become support. What’s interesting to note is all of these support and resistance lines are built from the trading activity of Q4, 2011.

 

 

The Inside Pitchfork is typically used for trading activity that is occurring within a previous trend range as the angle of bottom prong is based on 50% of the first two clicks. For example, the AUD/USD currency pair reached a recent peak in March and was identified by the top prong of this Inside Pitchfork, and if you add some additional inside lines such as 61.8% and 75%, this picks up the internal swings inside that fork.

 

 

eSignal offers settings for Schiff Pitchfork and a Modified Schiff Pitchfork under the drawing tool properties.

 

 

You can duplicate any tine of a Pitchfork as a parallel Trend Line by right-clicking any tine of the Pitchfork  and selecting "Duplicate as Trend Line".

 

 

 

Pitchfan

The ellipse tool enables one to draw an oval frame around important parts on a chart that a user would like to highlight.

 

 

The rectangle tool draws a box around a specific area within the chart. It is useful for identifying important price movements. 

 

 

This drawing tool allows you to create a channel with a defined "end-cap" to the trend.  It is a great way to encapsulate a trend with the rectangle shape that can be rotated at an angle of your choosing. 

 

 

While simple on the surface, this shape can be a powerful addition to marking support and resistance regions, or establishing patterns of trend retracements or extensions.

 

Seen below on the left, the blue triangle has been drawn to show an area typically referred to as an ascending triangle or pennant. They typically  follow a longer trend up or down and tend to act as platforms for breakouts that continue the earlier trend. The green triangle is marking a rare pattern called the Bullish Gartley. When used in conjunction with the Fibonacci retracements and extensions, the Gartley and Butterfly patterns can be extremely powerful, and the triangle tool can help to draw this out for you in your charts.

 

 

You can draw triangles in your charts by right-clicking the mouse inside the chart, selecting "Insert Drawing Tools" and then clicking Triangle.

Triangles can also be accessed byclicking the triangle icon in the char's drawing toolbar.

 

A Regression Trend Channel (RTC) is simply the mathematically standard deviation of the linear regression price data. It is calculated using the actual prices of the bars in the trend. The idea is to draw an upper and lower channel from the linear regression line by using the standard deviation of the prices. The break of a Regression Trend Channel is usually used as an entry or exit signal.

 

 

Drawing parallel lines was always possible in eSignal, we’ve just made it a lot easier now with the new Channel tool. You first start by drawing a basic trend line off the highs or lows of a trend, then a parallel line attaches to your mouse cursor so you can place the top or bottom of the channel. In an example below, the AUD/USD forms a channel between its trading range of March to April, and breaks to the upside. After a failed retracement at 38.2%, the trend continued and settled right back into that same channel.

 

  

Fibonacci Circle

Fibonacci Retracement

The Fibonacci Time tool is used a bit differently than the other Fib tools. It may seem simple on the surface, but, actually, it’s attempting to predict the length of future time cycles. A time cycle is the length of time it takes for one trend to complete. This may seem to be what we’ve been measuring all along, but, in fact, a time cycle is actually measured from one major pivot top to the next major pivot top. (Previously, we were measuring from bottom to top or vice versa.) All the common ratios still apply here (1.382, 1.618, 2.618), but we’re just measuring the 0 percent to 100 percent a bit

differently.