Chapter 1 Get to Know about Trendlines
By definition, a trendline is a line connecting two or more lows or two or more highs, with the lines projected out into the future.
Trend lines can help us to identify potential areas of increased supply and demand, which can cause the market to move down or up respectively.
When drawing trend lines it is best if you can connect at least two tops or bottoms together. The more tops or bottoms that connect, the stronger the trend line is.
Uptrend line
An uptrend line is a straight line drawn upward to the right that connects 2 or more low points. The second low must be higher than the first for the line to have an upward incline. Uptrend lines act as support and indicate that there is more demand than supply, even as the price rises. As long as prices remain above the trend line, the uptrend is considered to be intact. A break below the uptrend line indicates that a change in trend may be occurring.
Downtrend line
A downtrend line is a straight line drawn downward to the right that connects 2 or more high points. The second high must be lower than the first for the line to have a downward incline. Downtrend lines act as resistance and indicate that there is more supply than demand, even as the price falls. As long as prices remain below the trend line, the downtrend is considered to be intact. A break above the downtrend line indicates that a change in trend may be occurring.
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