![]() ![]() But there are many more ways to draw trendlines. That one trendline - drawn between the lows in 2004 and the lows in 2005 - provided support for a number of retracements over the next two years. Consider this example in the price chart of Google. In other words, a trendline can help you identify the market’s trend. Moreover, the actual angle or slope of a trendline can determine whether or not the market is extremely optimistic or extremely pessimistic.” If the trendline slopes downward, the bears are in control. If the trendline slopes upward, the bulls are in control. “A trendline represents the psychology of the market, specifically, the psychology between the bulls and the bears. As Jeffrey Kennedy, editor of Trader’s Classroom service, puts it: ![]() Yet you’d be amazed at the value a simple line can offer when you analyze a market. Typically, they quickly move on to more advanced topics and too often discard this simplest of all technical tools. “How to draw a trendline” is one of the first things people learn when they study technical analysis. The following trading lesson has been adapted from Jeffrey Kennedy’s eBook, Trading the Line - 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. How a Simple Line Can Improve Your Trading SuccessĮlliott Wave International’s Jeffrey Kennedy explains many ways to use this basic tool By Elliott Wave International So, let’s look at trend lines, support and resistance. Conversely, resistance is like a ceiling, where rising prices tend to stop and begin falling. a level at which falling prices tend to stop and reverse and go up again. As I’m sure you know support is like a floor for prices, i.e. ![]() So we will start with the lowly trend line and then we will look at 5 separate charts in an effort to brush up on 3 ways to identify support and resistance. So if you are just starting in the markets you should find this information valuable.ĭrawing a trend line is one of the first things people learn when they study technical analysis. Unfortunately, sometimes as we learn more sophisticated methods we tend to forget the basics. One of the most basic skills necessary when looking at a stock chart is using trend lines and identifying support and resistance. ![]()
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December 2022
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