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Profitable Day and Swing Trading: Using Price / Volume Surges and Pattern Recognition to Catch Big Moves in the Stock Market, + Website by Harry Boxer

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CHAPTER 6

Drawing Trend Lines and Why They’re Critical in Analyzing the Trend

Since my early years of trading, I have been actively drawing trend lines. I am a very visual person, and drawing lines that determine the trend, trend angles, channels, support/resistance, and so on has greatly enhanced my ability to quickly see when an important move may be taking place. Trend lines eliminate guessing, and your eyes are immediately drawn to those levels that may be very important to determining key breaks or trend direction changes and possible buy or sell action triggers.

It’s been my experience that most important trend lines should remain on the chart for weeks, months, or even years (especially if major significant peaks or troughs have been determined). It’s truly amazing to me how often a price will approach a long ago major high or low (even 10 to 15 years ago or longer) and bounce near those levels. This fact can be used by traders to help determine buy/sell or scale-in/out strategies. This may also be effective for day and short-term trends, as well. Key intraday and swing-trade trend breaks, again accompanied by big volume, will often be shorter-time-frame trend changers.

The length of time a trend line has been in force is also an important fact to consider. The more points that connect on a trend line on any time frame and the longer that line is, the more valid it becomes. A break of that line can be critical. That’s why I pay special attention to any longer-term or ...

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