Trend lines

Trend lines

Trend Lines are an important tool in technical analysis for both trend identification and confirmation. A trend line 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.. These lines are used to clearly show the trend and also help in the identification of trend reversals.

A trend line may be classified as:

  • Rising trend line or uptrend line
  • Declining trend line or downtrend line
  • Sideways trend line

 

  • trendfriend1

What is Market trends ?

A market trend is a tendency of a financial market to move in a particular direction over time. Trend is the most important concept in technical analysis. A trend designates the general direction of a market movement. It is important to identify trends so that you can trade with them rather than against them.

Types of Trend

A trend may be:

  • Upward – this is called a Rally ; the market trends the way up
  • Downward – this is called a Downtrend ; the market trends the way down
  • Sideways / Horizontal – this is called “flat market” or “trendless” ; the market trends nowhere

Trend Lengths

A trend of any direction can be classified according to its length

  • Short-term Trend ; it usually lasts no more than three weeks
  • Intermediate Trend ; it usually lasts somewhere between 3 weeks to several months
  • Long-Term or Major Trend ; it is considered to last for a year or more. It is composed of several intermediate trends, which often move against the direction of the Major Trend