Chapter 12. Trends—The Basics

Chapter Objectives

By the end of this chapter, you should

  • Know why identifying trends is paramount to profits in securities

  • Be able to recognize an uptrend, downtrend, and a trading range

  • Understand the concept of support and resistance

  • Be familiar with the major methods of determining trends

  • Be familiar with the major signals that a trend is reversing

We are now entering into the more controversial aspects of technical analysis, the analysis of trends, and in Part IV, “Chart Pattern Analysis,” the analysis of patterns. This is the “fuzzy” aspect of technical analysis that discourages most students very quickly because none of the observations or rules is specific. Rules in technical analysis come from many, many observations ...

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