Technical Talk: Trend Lines

11-21-2009 10-28-04 AM.pngtrendlines-Drawing trend lines is one of the first things that a professional chartist will do.  But how do we do it?  There can be short term trend lines and  longer term trend lines.  There can be trend lines that define resistance as well as support.  Do we connect the open, close, high or low?  Do we need to be absolutely exact or is close good enough. 

Here are the rules that I suggest when drawing trend lines.  Start with finding the longer term lines and then move to shorter term trend lines.  You need to have at least three definitive touches to be valid.  The more touches the better and over a longer period of time.  I suggest that you connect the lows of the candle for the lower trend line and the highs for the upper trend line.  It is best if the lines  touch exactly, but that will not always be the case. 

You will begin to see obvious trend lines the more experienced you become.  You will also begin to see that trend lines are a very powerful yet simple way to define support and resistance which if combined with other indicators can further enhance the strength of the support and resistance levels .  Best, Robin

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