Chapter 3: Trends

In the previous chapter I discussed the different types of charts used in technical analysis. In this chapter, I’ll discuss how you can interpret charts to identify trends. I’ll also discuss some trend trading strategies you can use.

Trends

The sharemarket is a free market with little regulatory control over buyers and sellers, and consequently the price and volume change with each transaction according to trader sentiment. The day-to-day price and volume changes can look like ripples that have no real significance and appear almost random. They’re known as static or white noise because it’s rather like the random static or noise you can get with a radio or television receiver. If there’s a sustained move in one direction ...

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