WHAT IS TRENDLINE

WHAT IS TRENDLINE?

A trend line may be rising,falling or horizontal (flat) trend line.These three types of trend lines represent three trends namely,up trend,down trend and side ways. with the violation of trend lines, we may see a reversal in trend.

IMPORTANCE OF TRENDLINES

•   A trendline is a straight line that connects two or more price points and then extends into the future to act as a line of support or resistance.

A trendline helps identify the trend as well as potential areas of support and resistance. 

•       Trend lines are an important tool in technical analysis for both trend identification and confirmation.

•       Trend lines also offer a simple and widely used technical analysis approach for timing entries exits when trading.

•       You should always remember that the more number of times the price touches a trend line.the more significant and valid that trend line becomes.

•       The steeper a trend line angles,the less reliable it becomes .

•       The length of the trend line is another important factor in its reliability ,Longer the length of a trendline,the more reliable it is.

•       An up sloping and down sloping trend line along with rising volumes confirms the reliability of the trend line.

•       Trend line provides reference for placing stop loss. A stop loss should be placed atleast 3% below or above the trend line after the occurrence of the break out or break down.