Chapter 10
Drawing Trendlines
In This Chapter
Seeing trendedness with lines
Knowing how to draw support and resistance lines
Judging breakouts of support and resistance
Acquainting yourself with internal trendlines
Often you can see a trend with the naked eye, but to impose order on your visual impression, you can connect the dots, so to speak, by actually drawing a line along the price bars. A trendline is a straight line that starts at the beginning of the trend and stops at the end of the trend. Today everyone uses software to draw trendlines, although you can also use a Number 2 pencil.
In this chapter, I cover support and resistance, two of the most important concepts in technical analysis, and also the linear regression, which depicts pure, true trend.
Looking Closely at a Price Chart
Sometimes a trendline pops out at you when you look at a chart. The price is moving in a consistent fashion, either up or down. Usually your eye directs your hand to draw a trendline — but then you see another one that may be more representative. You may find yourself frustrated at this situation ...
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