Analyze the market through the slope of the trend line
The relative steepness of the trendline is also important. Generally speaking, trendlines with a slope angle of about 45° make the most sense. Some chartists even simply draw a straight line with a 45° inclination from a significant high or low point on the chart as a major trendline. The famous American technical analysis expert Gann paid special attention to the so-called 45° line technology. Such a straight line reflects the rate of price rise or fall over time, which happens to be in a perfect balance from the two aspects of price and time (Gann pays great attention to geometric angles, and the 45° line is the most important).
If the trendline is too steep (like line 1 in Figure 1 below), it usually indicates that prices are rising too fast to be sustainable. If such a trendline is broken, it may simply mean that the slope of the uptrend will adjust back above and below the 45° line (as shown by line 2 in the chart below), rather than a reversal of the trend. If the trendline is too flat (like line 3 in Figure 3 below), the uptrend is too weak to be reliable.
Adjustment of the trend line
In some occasions that the trend line needs to be adjusted, it can be adjusted to meet the requirements of slowing down or accelerating the trend. It may also be necessary to draw a new, steeper trend line if the original trend line was too flat. As shown below, after a steep trendline (line 1) is broken, a new, flatter line (line 2) must be made.
In fact, at any moment, there are always several trends of different time scales coexisting in the market, so it is necessary for us to use different trend lines to describe the trends of each level respectively. For example, a major uptrend line is formed by connecting the lows of major uptrends. It is also possible to describe intermediate price swings with shorter and more sensitive lines. Alternatively, shorter straight lines can be used to describe brief movements.
We use a variety of trendlines to describe trends at different levels. In the chart above, line 1 is the major uptrend line and defines the major uptrend. Lines 2, 3 and 4 define a medium uptrend. Line 5 defines a brief uptrend in the midst of the last intermediate uptrend. On a chart, technical analysts often use many kinds of trend lines at the same time.
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