V.14:3 (134-136): Trendlines as a Technical Tool by Joe Luisi
Product Description
NOVICE TRADER
Trendlines As A Technical Tool
Applying trendlines to charts is a classic form of analysis. Here are some of the basics of using this tool. by Joe Luisi
Trendlines, which are one of the most basic techniques in chart analysis, are lines drawn to portray market direction and even project where the market is going. A trendline† connects either a series of highs or a series of lows in a trend. It can represent either support†, as in an uptrend line, or resistance†, as in a downtrend line. (Consolidations are marked by horizontal trendlines.) Trendlines can provide visually oriented traders with an idea of how the market is doing, and they can also pinpoint changes in trend. Just as markets come in various types, so do trendlines, and they can be used in various ways to examine different market situations. Let's take a look.
UPTREND LINE
The uptrend line is a diagonal line connecting significant lows and indicates when the market is moving higher and making a series of higher lows and higher highs. Figure 1 shows a series of three uptrend lines for the Swiss franc; in this chart, you can see that the franc is moving higher. Using an uptrend line on a long-term basis, we can connect the lows made in December 1994 with the franc's activities in February 1995 and in May 1995.
These three points of time - December 1994, February 1995 and May 1995 - represent significant lows. On a longer-term basis, this market is strong; it will move higher as long as this line is not broken. When the market rallies, you can draw another trendline to connect the lows of February and March, and as the market climbs, another uptrend line can be drawn.
Trendlines As A Technical Tool
Applying trendlines to charts is a classic form of analysis. Here are some of the basics of using this tool. by Joe Luisi
Trendlines, which are one of the most basic techniques in chart analysis, are lines drawn to portray market direction and even project where the market is going. A trendline† connects either a series of highs or a series of lows in a trend. It can represent either support†, as in an uptrend line, or resistance†, as in a downtrend line. (Consolidations are marked by horizontal trendlines.) Trendlines can provide visually oriented traders with an idea of how the market is doing, and they can also pinpoint changes in trend. Just as markets come in various types, so do trendlines, and they can be used in various ways to examine different market situations. Let's take a look.
UPTREND LINE
The uptrend line is a diagonal line connecting significant lows and indicates when the market is moving higher and making a series of higher lows and higher highs. Figure 1 shows a series of three uptrend lines for the Swiss franc; in this chart, you can see that the franc is moving higher. Using an uptrend line on a long-term basis, we can connect the lows made in December 1994 with the franc's activities in February 1995 and in May 1995.
These three points of time - December 1994, February 1995 and May 1995 - represent significant lows. On a longer-term basis, this market is strong; it will move higher as long as this line is not broken. When the market rallies, you can draw another trendline to connect the lows of February and March, and as the market climbs, another uptrend line can be drawn.
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |