Trend Lines Technical analysis, Tools and examples

Trend lines

A trend line is a straight line that connects two or more price points and then extends into the future to act as a line of support or resistance. Principles of support and resistance levels can be applied to trend line.

Uptrend line

An uptrend line is a straight line drawn upward to the right that connects 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 is occurring. Uptrend line breakdown might be bestselling opportunity with stop loss in place for big profit. But you have to cross check that with indicators and oscillators.

Downtrend line

 

A downtrend line is a straight line drawn downward to the right that connects 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 is occurring, and that is called as bullish breakout and will be best buying opportunity for big profits but you have to cross check that with indicators and oscillators.

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Pramod Baviskar

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