Trading Trendline Indicators
Trendlines are very handy in charting and analyzing investment positions in both offline and
One of the simplest trendlines is a vertical trendline. This trendline is often used to simply denote the time of occurrence of a certain event relating to the chart, like a news release, market opening/closing, given time of the day or night and so on.
The other basic trendline is a horizontal trendline. It is often being used in marking a level which a price on a chart has reached and from which it has 'bounced' or reversed its direction. When a price reaches a horizontal trendline several times it forms what is commonly called a support trendline or a resistance trendline. The first one is formed when price rebounces few times on its way down, the second one is created when it does that on its way up. It is a popular believe that when such line is penetrated the likelihood of it continuing that way for some time increases with the length of that line or the number of times it was approached but did not penetrate it. And since many people observe that believe it becomes something visible on the price charts rather frequently and therefore can be utilized to one's financial advantage.
And one more commonly used variation of trend lines is slanted trendline. It behaves the same way as the horizontal trend line except that it runs at an angle.
Another common thing that happens with these trendlines is that it can go bouncing back and forth between a given support and resistance line. In such case it forms what is often referred to as price channel.
These are the most simple and perhaps the most usable ones as well. Other trend lines include curved ones like parabolic or logarithmic trendlines; such can get very complicated mathematically and personally I wouldn't even think of applying such without charting software. Fortunately these days many
One of the simplest trendlines is a vertical trendline. This trendline is often used to simply denote the time of occurrence of a certain event relating to the chart, like a news release, market opening/closing, given time of the day or night and so on.
The other basic trendline is a horizontal trendline. It is often being used in marking a level which a price on a chart has reached and from which it has 'bounced' or reversed its direction. When a price reaches a horizontal trendline several times it forms what is commonly called a support trendline or a resistance trendline. The first one is formed when price rebounces few times on its way down, the second one is created when it does that on its way up. It is a popular believe that when such line is penetrated the likelihood of it continuing that way for some time increases with the length of that line or the number of times it was approached but did not penetrate it. And since many people observe that believe it becomes something visible on the price charts rather frequently and therefore can be utilized to one's financial advantage.
And one more commonly used variation of trend lines is slanted trendline. It behaves the same way as the horizontal trend line except that it runs at an angle.
Another common thing that happens with these trendlines is that it can go bouncing back and forth between a given support and resistance line. In such case it forms what is often referred to as price channel.
These are the most simple and perhaps the most usable ones as well. Other trend lines include curved ones like parabolic or logarithmic trendlines; such can get very complicated mathematically and personally I wouldn't even think of applying such without charting software. Fortunately these days many
posted by Ramzes at 11:29 AM
0 Comments:
Post a Comment
<< Home