01/02/2011 - Trendlines: How a Straight Line on a Chart Helps You Identify the Trend
Technical analysis of financial markets does not have to be complicated. Here are EWI, our main focus is on Elliott wave patterns in market charts, but we also employ other tools -- like trendlines.
Featured Commentary
Publishing Date
Trendlines: How a Straight Line on a Chart Helps You Identify the Trend
A free 14-page Club EWI report shows you 5 ways trendlines can improve your trading decisions
January 31, 2011
By Elliott Wave International
About The Publisher
This article was syndicated by Elliott Wave International and was originally published under the headline Trendlines: How a Straight Line on a Chart Helps You Identify the Trend. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Latest Site News
A trendline is a line on a chart that connects two points. Simple? Yes. Effective? You be the judge -- once you read the free 14-page Club EWI report by EWI's Chief Commodity Analyst and Senior Tutorial Instructor Jeffrey Kennedy.
Enjoy this free excerpt -- and for details on how to read this report in full, free, look below.
Trading the Line -- 5 Ways You Can Use Trendlines to Improve
Your Trading Decisions
(Free
Club EWI report, excerpt)
Chapter 1
Defining Trendlines
Before I define a trendline, we need to identify what a line is. A line simply connects two points, a first point and a second point. Within the scope of technical analysis, these points are typically price highs or price lows. The significance of the trendline is directionally proportional to the importance of point one and point two. Keep that in mind when drawing trendlines.
A trendline represents the psychology of the market, specifically, the psychology between the bulls and the bears. If the trendline slopes upward, the bulls are in control. If the trendline slopes downward, the bears are in control. Moreover, the actual angle or slope of a trendline can determine whether or not the market is extremely optimistic, as it was in the upwards sloping line in Figure 1-1 or extremely pessimistic, as it was in the downwards sloping line in the same figure.
You can draw them horizontally, which identifies resistance and support. Or, you can draw them vertically, which identifies moments in time. You primarily apply vertical trendlines if you’re doing a cycle analysis.
Chapter 2
Drawing Trendlines
In this section, I’ll show you how I draw trendlines. I’ll start with the most common, simple way to draw them...
For more free trading lessons on trendlines, download Jeffrey Kennedy's free 14-page eBook, Trading the Line – 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. It explains the power of simple trendlines, how to draw them, and how to determine when the trend has actually changed. Download your free eBook.
Related To This
Comments
Latest Comments on STOCKTRKR
Latest Related News on Google
Register as a Member

Become A Member and view our FREE Trading E-Book Collection!
To register for your free members account you will need a valid e-mail address. If you wish to access our members pages you can register for an account here.
Members of our website get access to even more...
- Forex Tools and calendars
- Add Chart Pages to your favourites for easy access.
- Post in our forums and make comments on shares
- Free Trading E-Book collection!
- NEW: Access to Our Own Trading Log
- Latest Offers from brokers and spread betters
Free World Market Data & Resources
Latest Tweets
Add your own tweets to this feed, click here.
- FT: Spain’s pain becomes Europe’s big fear: Fears about contagion from Greece and worries a... http://t.co/39JP79ce http://t.co/QNbvb5uo — 37 min 38 sec ago
- FT: Facebook off to faltering public start: Glitches delayed the opening of trading and und... http://t.co/eoCfRR9j http://t.co/QNbvb5uo — 1 hour 41 min ago
- FT: China linked to ‘economic espionage’: The Pentagon report says the country will continu... http://t.co/TXwy3rkx http://t.co/QNbvb5uo — 2 hours 44 min ago
- Business Update: Merkel 'suggests Greek euro vote': German leader Angela Merkel suggests Gr... http://t.co/tNiv0QXh http://t.co/QNbvb5uo — 2 hours 46 min ago
- Business Update: Market jitters over eurozone woes: European markets suffer a nervous sessi... http://t.co/5MrOuYKS http://t.co/QNbvb5uo — 3 hours 49 min ago
- 1 of 11179
- ››









You must be a member to post comments, sign up for a free account here. If you are already a registered you can Login Here