A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits

Trendlines and What They Reveal

Trendlines are straight lines drawn under a rising price move or above a declining price move. The points from end to end are the low points (in a rising trend) or the high points (in a falling trend). The “perfect” trendline stops as soon as the price level stops the line from moving farther. However, as a practical matter, temporary retracements or spikes violating the line can be overlooked in the greater interest of tracking the price movement.

For example, in Figure 4.1, a bullish trend was underway for the last two years of the three-year period charted. The line was disrupted in February, 2014 before the trend resumed. For five months, the pattern was unclear, until the upward movement again resumed in ...