It is important for traders to know which way the market is going, i.e. is it trending up or down or even going sideways. Money can be made in all these conditions, but it is important that traders “Trade with the Trend”
A trendline is a straight line that connects key prices areas in a move, an up trendline connects successive Higher Lows or Higher Highs and a down trendline connects successive Lower Highs or Lower Lows.
Trendlines connecting successive Lower Highs is also known as a resistance line while a trendline connecting successive Higher Lows is also known as a support line.
Trendlines can be defined as border lines for making buy or sell decisions. Trendlines form the boundary lines for most of the chart patterns as will been seen in later sections.
A Trendline of about 45 degrees is considered the most reliable, and if steeper than that the market typically cannot sustain that kind of momentum for long. Watch to see if the market bounces off a trendline or slices through. Watch for retests of the trendline after the price has sliced through.
You will often find good buying or selling points at the 3rd touch of a trendline.
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