Trend Line


A trend line is formed when you can draw a diagonal line between two or more price pivot points. They are commonly used to judge entry and exit investment timing when trading securities[1]. It can also be referred to a dutch line as it was first used in Holland.

A trend line is a bounding line for the price movement of a security. A support trend line is formed when a securities price decreases and then rebounds at a pivot point that aligns with at least two previous support pivot points. Similarly a resistance trend line is formed when a securities price increases and then rebounds at a pivot point that aligns with at least two previous resistance pivot points.
Trend lines on a price chart.

Trend lines are a simple and widely used technical analysis approach to judging entry and exit investment timing. To establish a trend line historical data, typically presented in the format of a chart such as the above price chart, is required. Historically, trend lines have been drawn by hand on paper charts, but it is now more common to use charting software that enables trend lines to be drawn on computer based charts. There are some charting software that will automatically generate trend lines, however most traders prefer to draw their own trend lines.

When establishing trend lines it is important to choose a chart based on a price interval period that aligns with your trading strategy. Short term traders tend to use charts based on interval periods, such as 1 minute (i.e. the price of the security is plotted on the chart every 1 minute), with longer term traders using price charts based on hourly, daily, weekly and monthly interval periods.

However, time periods can also be viewed in terms of years. For example, below is a chart of the S&P 500 since the earliest data point until April 2008. Please note that while the Oracle example above uses a linear scale of price changes, long term data is more often viewed as logarithmic: e.g. the changes are really an attempt to approximate percentage changes than pure numerical value.
Previous chart from 1950 to about 1990, showing how linear scale obscures details by compressing the data.

Trend lines are typically used with price charts, however they can also be used with a range of technical analysis charts such as MACD and RSI. Trend lines can be used to identify positive and negative trending charts, whereby a positive trending chart forms an upsloping line when the support and the resistance pivots points are aligned, and a negative trending chart forms a downsloping line when the support and resistance pivot points are aligned.

Trend lines are used in many ways by traders. If a stock price is moving between support and resistance trend lines, then a basic investment strategy commonly used by traders, is to buy a stock at support and sell at resistance, then short at resistance and cover the short at support. The logic behind this, is that when the price returns to an existing principal trend line it may be an opportunity to open new positions in the direction of the trend, in the belief that the trend line will hold and the trend will continue further. A second way is that when price action breaks through the principal trend line of an existing trend, it is evidence that the trend may be going to fail, and a trader may consider trading in the opposite direction to the existing trend, or exiting positions in the direction of the trend.

source: www.wikipedia.org



18 comments:

  1. The most basic things that every newbie traders should know. From here, they may take a further step of technical analysis. Trading Business

    ReplyDelete
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  3. WARNINGS:

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  4. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.
    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!
    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.
    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.
    ==> http://www.forextrendy.com?hfsdtb63546
    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.
    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:
    ==> http://www.forextrendy.com?hfsdtb63546”

    ReplyDelete
  5. Do you think that to dramatically improve your success rate you have to read tons of thick books, buy expensive software and spend countless hours of learning more about Forex?

    What I'm going to share with you is something very EASY to use and very POWERFUL at the same time.

    Let me give you an EXAMPLE:

    Imagine you trade a system that makes 50% winning trades, but another 50% are losing trades. If you increase your odds of winning by only 20%, that would make 70% winning trades and 30% losing trades.

    Well, HOW TO accomplish that?

    Just pick the best trending pair at the current time and simply follow the trend! I have found ONE INCREDIBLE TOOL that continuously scans the Forex market and picks the most reliable trending pairs for you.

    ==> http://www.forextrendy.com?ljsjhd8374h

    By taking signals in the direction of a strong trend you would REDUCE UNNECESSARY LOSSES and increase the odds of winning. You need to know "how well" the market is trending to avoid very short-term trends.

    STOP hunting the market for every potential trade. Pick only the best trending pairs and time frames and DO NOT take any trading signals in the choppy market (unless you know exactly what you are doing).

    Successful traders keep it simple and this is the way how the pros made fortunes in the markets - by trading less and making more.

    To increase the profitability of any system or robot you are currently using, check out this easy and powerful ultimate solution:

    ==> http://www.forextrendy.com?ljsjhd8374h

    ReplyDelete
  6. Drawing trend lines is one of the few easy techniques that really WORK. Prices respect a trend line, or break through it resulting in a massive move. Drawing good trend lines is the MOST REWARDING skill.

    The problem is, as you may have already experienced, too many false breakouts. You see trend lines everywhere, however not all trend lines should be considered. You have to distinguish between STRONG and WEAK trend lines.

    One good guideline is that a strong trend line should have AT LEAST THREE touching points. Trend lines with more than four touching points are MONSTER trend lines and you should be always prepared for the massive breakout! 

    This sophisticated software automatically draws only the strongest trend lines and recognizes the most reliable chart patterns formed by trend lines...

    ==> http://www.forextrendy.com?kdhfhs93874

    Chart patterns such as "Triangles, Flags and Wedges" are price formations that will provide you with consistent profits.

    Before the age of computing power, the professionals used to analyze every single chart to search for chart patterns. This kind of analysis was very time consuming, but it was worth it. Now it's time to use powerful dedicated computers that will do the job for you:

    ==> http://www.forextrendy.com?kdhfhs93874

    ReplyDelete
  7. "Which Forex pair and time frame is best to trade" is the frequently asked
    question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute
    time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE
    ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well
    trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the
    BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to
    monthly. This way you pick the best trending pair and time frame at the
    current time.

    The system is running on our powerful computers, so you have nothing to
    download and install. Just join in and start using it within a FEW MINUTES!
    Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  8. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  9. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  10. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  11. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  12. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.

    ==> http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:

    ==> http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete

  13. Do you think that to dramatically improve your success rate you have to read tons of thick books, buy expensive software and spend countless hours of learning more about Forex?

    What I'm going to share with you is something very EASY to use and very POWERFUL at the same time.

    Let me give you an EXAMPLE:

    Imagine you trade a system that makes 50% winning trades, but another 50% are losing trades. If you increase your odds of winning by only 20%, that would make 70% winning trades and 30% losing trades.

    Well, HOW TO accomplish that?

    Just pick the best trending pair at the current time and simply follow the trend! I have found ONE INCREDIBLE TOOL that continuously scans the Forex market and picks the most reliable trending pairs for you.

    http://www.forextrendy.com?vhbshygdf398432

    By taking signals in the direction of a strong trend you would REDUCE UNNECESSARY LOSSES and increase the odds of winning. You need to know "how well" the market is trending to avoid very short-term trends.

    STOP hunting the market for every potential trade. Pick only the best trending pairs and time frames and DO NOT take any trading signals in the choppy market (unless you know exactly what you are doing).

    Successful traders keep it simple and this is the way how the pros made fortunes in the markets - by trading less and making more.

    To increase the profitability of any system or robot you are currently using, check out this easy and powerful ultimate solution:
    http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
  14. Drawing trend lines is one of the few easy techniques that really WORK. Prices respect a trend line, or break through it resulting in a massive move. Drawing good trend lines is the MOST REWARDING skill.

    The problem is, as you may have already experienced, too many false breakouts. You see trend lines everywhere, however not all trend lines should be considered. You have to distinguish between STRONG and WEAK trend lines.

    One good guideline is that a strong trend line should have AT LEAST THREE touching points. Trend lines with more than four touching points are MONSTER trend lines and you should be always prepared for the massive breakout!

    This sophisticated software automatically draws only the strongest trend lines and recognizes the most reliable chart patterns formed by trend lines...

    http://www.forextrendy.com?kdhfhs93874

    Chart patterns such as "Triangles, Flags and Wedges" are price formations that will provide you with consistent profits.

    Before the age of computing power, the professionals used to analyze every single chart to search for chart patterns. This kind of analysis was very time consuming, but it was worth it. Now it's time to use powerful dedicated computers that will do the job for you:

    http://www.forextrendy.com?kdhfhs93874

    ReplyDelete
  15. "Which Forex pair and time frame is best to trade" is the frequently asked question and I want do give you the DEFINITE ANSWER.

    Are you expecting that I am going to say something like EUR/USD on 5-minute time frame or GBP/USD on daily...? No, it is not so simple, but SIMPLE ENOUGH we can figure it out!

    The "PROBLEM" is that markets change over time. If GBP/USD was a well trending currency pair a few years ago, today it is another one.

    I actually want to let you know about a SPECIAL TOOL that I use to find the BEST TRENDING PAIRS among all the Forex pairs.
    http://www.forextrendy.com?vhbshygdf398432

    The software scans 34 Forex pairs on all time frames from minute to monthly. This way you pick the best trending pair and time frame at the current time.

    The system is running on our powerful computers, so you have nothing to download and install. Just join in and start using it within a FEW MINUTES! Get it on the link below:
    http://www.forextrendy.com?vhbshygdf398432

    ReplyDelete
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