Automated Trendline Detection

With advanced algorithm integrations in TrendSpider, traders can allow the system to automatically draw the trend lines with mathematical precision on the chart and investigate the unique insights into the bigger picture of trends.

In this documentation, we will explore:

  • Adding Automated Trendlines
  • How Automated Trendlines Work
  • Right-Click Automated Trendline
  • Manage Trend Analysis Preferences
  • Truth in Analysis Line
  • Auto Trends Filter
  • Manage Advanced Customization Settings
  • Auto Trends on Log Scale Vs. Regular Scale

Let’s get started 🚀

Adding Automated Trendlines

You can easily add the automated trendlines to the chart by simply clicking on the Trends button from the top toolbar.

Click on the Trends button from the top toolbar

As a result of this action, TrendSpider will automatically draw the trendlines on the chart (based on the selected preferences) without involving any manual efforts.

trendlines on the chart

How Automated Trendlines Work

Enabling Trends from the top toolbar allows the platform to automatically draw trend lines from reaction highs and lows. These trend lines remain visible until the price action moves too far away.

In the illustration below, you can observe the 1-hour versus weekly chart of the S&P 500 ETF (SPY). In the chart, you can observe how the short-term support trend line, represented in blue, interacts with the long-term resistance trend line, represented in green dashes.

When the price falls to double support, it gaps higher toward the upper end of the short-term price range.

1-hour versus weekly chart of the S&P 500 ETF

You can also use auto trend lines with MTFA (Multi-Time Factor Analysis) turned on to plot automatic trendlines drawn on the different time compression in the existing chart. For example, the auto trendlines drawn on a secondary timeframe, (let’s say Weekly) can be plotted on a “Daily” existing (primary) chart for the AAPL symbol.

 auto trend lines with MTFA turned on

In this chart above, you will observe solid and dashed lines. The solid lines are representing the auto trend lines drawn in the current timeframe and the dashed lines are representing the trend lines drawn in a secondary timeframe on the current chart.

Right-Click Automated Trendline

You can right-click on an automatically generated trendline to execute the following actions:

  • Create Alert
  • Lock the Trend Line
  • Remove the Trend Line
  • Remove All Related Trend Lines

Right-Click Automated Trendline

Create Alert

Select this option to create simple dynamic alerts and allow TrendSpider to fire notifications whenever the price breaks through, touches, or bounces off of a trend line. For more information, please refer to the documentation- Create a Dynamic Price Alert

create simple dynamic alerts

Lock the Trend Line

Enabling automated trendlines might add a lot of trendlines to the chart whereas you might be interested only in some specific or individual trendlines. In this case, you would like to remove the rest of the auto trend lines to streamline your focus on the selected ones.

For this purpose, you can lock the trendlines on which you want to focus exclusively and turn off the Trends from the top toolbar to remove the rest of the unwanted trendlines. You find the locked lines turned to bold.

Tip: You can also double-click on the Trendline to lock it 💡

Lock the Trend Line

Remove this Trend Line

Select this to remove the trend lines that are not important to your analysis.

Tip: You can also press Shift+Click to remove the trend line. 💡

Remove All Related Trend Lines

Select this to remove all the related trend lines from the chart.

Manage Trend Analysis Preferences

You can manage the preference settings to control how automated trendlines appear on the chart.

Step 1: Click on the vertical ellipsis (⋮) adjoining the Trend button from the top toolbar.

vertical ellipsis \(⋮\) adjoining the Trend button

Step 2: Configure the following three:

  • Analysis Type: This allows you to set the distance between the candles
  • Drawing Input: This allows you to decide how to connect the trend lines (Wick to Wick or Body to Body)
  • Islands (Gaps): This allows you to decide whether to ignore the gaps or respect them

Configure the Trend Analysis Preferences

Please refer to the documentation on Customization & Tuning to learn more about Analysis Type, Drawing Input, and Island (Gaps).

Step 3: Click on the Apply to apply your preferences for the automated trend lines.

Click on the Apply to apply your preferences

Truth in Analysis Line

With automated trends turned on, you will observe a vertical dotted line on the chart which is known as the Truth in Analysis Line. It conveys the exact timestamp when analysis on any chart was completed for plotting the automated trendlines.

All you have to do is hover your cursor at the bottom part of this line and it will display a dialog box conveying the timestamp when the system looked at the price data for plotting the auto trendlines on the chart.

In the snippet below, you can observe that it was 30th March 2022 at 00:52 when the TrendSpider completed the data analysis last time to plot the auto trendlines.

Truth in Analysis Line

You will always find two Truth in Analysis lines on the chart and the part of the price in between these vertical dotted lines is used by the system for calculating and plotting the automated trendlines on the chart for the selected timeframe.

Hence, if you will check the timestamp on the Truth in Analysis Line, and if it is not the most recent capture, then you will need to refresh it so that the system can recalculate the data for plotting the trendlines to the most recent price action. When you refresh an analysis, it locks the trends at the current point in time until you refresh it again or the analysis becomes stale by moving out of range. If the analysis becomes stale, the line will turn red and the chart will automatically go into live mode.

You can force-refresh the analysis by simply moving your cursor to the bottom of the Truth in Analysis line and clicking on the Refresh & Lock. As a result of this action, you will observe the new auto trend lines based on the latest price reality.

force-refresh the analysis

There are two kinds of Truth in Analysis Lines:

  • Yellow lines (Dark Mode) or Blue Lines (Light Mode) mean that the analysis is currently locked at the point in time.
  • Red lines indicate that the analysis is not locked and the line is updated each time a user changes their analysis.

Auto Trends Filter

You can navigate to the “Show Trends” section from the top toolbar and filter the automatically generated Trend Lines appearing on the chart.

Auto Trends Filter

You can choose to view the auto trends based on any of the following three parameters discussed below.

Most Relevant

Select this option from the dropdown list to filter out the irrelevant trend lines and display only the top one percent trend lines on the chart.

Note*: This is a default selection.*

display only the top one percent trend lines

More Lines

Select this option from the dropdown list to have a filtered but loose view where the maximum lines that might be relevant shall appear on the chart.

maximum lines that might be relevant shall appear

All (Unfiltered)

Select this option from the dropdown list to have all the lines generated on the chart as analyzed by the system, regardless of the relevance.

all the lines generated on the chart

Manage Advanced Customization Settings

Step 1: Click on the vertical ellipsis (⋮) adjoining the Trend button from the top toolbar.

vertical ellipsis \(⋮\) adjoining the Trend button

Step 2: Click on the Advanced button.

Click on the Advanced

Step 3: Navigate to the Analysis tab to manage Base Points and Lines. Otherwise, navigate to the Trends tab to manage the mathematical formulas used as a sorting algorithm to define the way automated trend lines are filtered on the chart.

Analysis Tab and Trends Tab

With this understanding, let’s explore the following three components that influence how automated trendlines are generated and appear on the chart:

  • Base Points
  • Lines
  • Mathematical Formulas

Base Points

The Base Points under the Analysis tab convey how far apart one candle high needs to be from another candle high for the system to connect it and draw the automated trend lines on the chart. With advanced settings options, you can change these base point parameters to customize how many trendlines should be identified and plotted on the chart.

In the snippet illustrated below, the Daily timeframe has been selected where the H/L length, Daily setting is “10 candles apart” and the automated trendlines on the chart are set to All (Unfiltered).

Unfiltered

Carrying forward these settings, if the H/L Length, Daily is changed from 10 to 5 for example and you hit the Apply button at the bottom, then you will find more auto trendlines plotted on the chart because more base points can be connected to each other in this case.

Unfiltered More Lines

Note: The system can detect and plot up to 2000 trendlines on the chart 💡

To sum it all up, the base points help the TrendSpider to navigate all the possible trendlines on the chart based on the distance between candle highs. Scroll down and click on Apply at the bottom to execute your changes.

Lines

Apart from H/L numbers, you can also modify ATR for Islands. While the first five fields under Base Points allow you to filter the trendlines based on the time frames, you will also find the ATR Length and ATR factor (islands) within this section that are used together to filter out the trendline based on the proximity (price gaps).

The price gap is calculated using the “ATR Length*ATR factor” and if the distance from the line to the last price is greater than the price gap, then the line will be dismissed. To put it in the other words, if trend lines are not within the ATR factor of the recent price action, they will not show up on the chart.

 modify ATR for Islands

The numbers contained under the Lines section determine if the line will be dismissed or not where each number is an ATR factor for a specific resolution. You can change these ATR settings and adjust the criteria for detecting price gaps.

change the ATR settings

Scroll down and click on Apply at the bottom to execute your changes.

Mathematical Formulas

The mathematical formulas added under the Trends tab scan all the trendlines (Unfiltered) and count how many times each trendline had a bounce or a breakthrough. The lines that have the highest scores based on these formulas in the top 1% of all the lines are the ones that appear in the final Most Relevant view on the chart.

TrendSpider makes it easy to customize the existing mathematical formulas that are used as a sorting algorithm for all possible automated trend lines, allowing traders to change the way the system identifies trend lines. Traders can also add their own mathematical values for TrendSpider to identify custom trend lines.

The mathematical formulas added under the Trends tab

To customize or edit the existing formulas, simply hover your cursor over them and make the relevant changes in title, color, or formula, or all.

customize or edit the existing formulas

Add your own mathematical values for TrendSpider to identify custom trend lines. Scroll down and click on the ADD button to define the title, color, and mathematical formula.

Please refer to the documentation on Custom Trend Line Detection & Scoring Formulas to explore several built-in variables and functions that you can use while writing the mathematical formulas.

Add your mathematical values for TrendSpider to identify custom trend lines

Auto Trends on Log Scale Vs. Linear Scale

By default, the charts in TrendSpider are graphed in a linear scale style where the price values on the Y-axis are displayed in an equal distribution. To change this default configuration on the chart and replace it with the Logarithmic Scale, simply click on the Log button as can be observed in the snippet below and the auto trendlines will be curved as a result of this action to display the prices on the Y-axis based on the percentage increase rather than increasing absolute values.

For more information, please refer to the documentation on the Logarithmic Scale.

Auto Trends on Log Scale

Jul 26, 2022

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