Welcome to yet another awesome series of articles!
As you know, we have already talked about what a trend is, and how it may be identified in many ways such as the classic chart patterns, the moving average, the channel, and other cool techniques.
However, it’s now time to move on to another method, equally interesting and useful!
The trendlines!
So, let’s have a look at trendlines, what they are and how they can help us analyze the price charts.
For starters, a trendline is a visual tool to help us identify the trend either up or down.
It is a graphic representation of the prevailing trend.
Cool, right?
Well, recalling our school years, to draw a straight line at least two points are needed. Connect two points and voila, a straight line.
The more points the merrier of course.
But more on that as we move on.
Confused? Let’s simplify it a bit more!
Quite often, traders connect a series of ascending lows (known as bottoms) during a rally to form an up trendline. Similarly, during a downtrend, they connect a series of highs (known as tops) to reveal the underlying trend.
Much better ey? Good! Because in the next article we’ll be teaching you guys how to draw trendlines!
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