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, a 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. Because the observations or rules are not specific, they discourage most students very quickly. Rules in technical analysis come from ...

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