Stocks & Commodities V. 25:7 (56-58): Trading Trendline Breaks (Part 1) by Sylvain Vervoot
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Trading Trendline Breaks (Part 1) by Sylvain Vervoot
One of the best trading methods in technical analysis is the application of trendline breaks. Find out why.
am convinced that one of the best trading methods using technical analysis is the application of trendline breaks. Let me convince you too. Let’s start off by discussing the differences and similarities of linear and logarithmic scaling. First of all, take a look at your charts. Are they linear both horizontally for the time setting and vertically for the price setting? Or do you have to use a semilogarithmic scale with a linear scaling on the time axis and a logarithmic scaling on the price axis?
Linear scaling: If you are using a division of five points on the linear scaling, then for a price change from $25 to $50 there are five divisions. For a price change from $50 to $100 there are 10 divisions. This means that the distance on the vertical axis from $50 to $100 is twice as large as the one from $25 to $50 (Figure 1).
One of the best trading methods in technical analysis is the application of trendline breaks. Find out why.
am convinced that one of the best trading methods using technical analysis is the application of trendline breaks. Let me convince you too. Let’s start off by discussing the differences and similarities of linear and logarithmic scaling. First of all, take a look at your charts. Are they linear both horizontally for the time setting and vertically for the price setting? Or do you have to use a semilogarithmic scale with a linear scaling on the time axis and a logarithmic scaling on the price axis?
Linear scaling: If you are using a division of five points on the linear scaling, then for a price change from $25 to $50 there are five divisions. For a price change from $50 to $100 there are 10 divisions. This means that the distance on the vertical axis from $50 to $100 is twice as large as the one from $25 to $50 (Figure 1).
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