Stocks & Commodities V. 25:9 (20-28): Trading Trendline Breaks by Sylvain Vervoort

Stocks & Commodities V. 25:9 (20-28): Trading Trendline Breaks by Sylvain Vervoort
Item# \V25\C09\170VERV.PDF
Availability: In Stock

Product Description

Trading Trendline Breaks - PT 2 by Sylvain Vervoort

Trendlines are common technical analysis charting tools, but there are a number of ways to implement them in your trading. Hereís an in-depth look at trendlines.

Previously, I discussed how trendlines are plotted, emphasizing that logarithmic trendlines are more effective than linear ones. This time, Iíll discuss how to trade breaks in trendlines as well as the system I apply to my trading. A long-term investor using monthly data could act upon a number of trendlines in Figure 1. Assuming you can trade this stock both long and short:

1. At the end of 1992 the closing price breaks through the downtrend line. This is a buy signal.

2. After a first reaction, the price moves up again during the second half of 1993. This is a clear second pivot point for drawing a longer-term uptrend line. Note from this point on that the price is accelerating and with time, moving farther away from the uptrend line. The best thing to do when this kind of move develops is to follow the new move with a new trendline, as shown.

3. Beginning in 1994 the price drops below the uptrend line. Itís time to close the long position and open a short one. The idea is to buy the stock back at a later date for a lower price so you can make a profit.

4. In the second quarter of 1995, the price rises above the downtrend line. This is a signal to close the short position and open a new long one.

*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 users can view the S&C Digital Edition in the subscriber's section on

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order