Trendlines
Trendlines are to technical analysis as hammers are to carpentry. Knowing how to use trendlines properly can save you money and allow you to enter a new trade with confidence.
At the end of the last chapter, I asked if you could name the three types of trendlines. They are internal, external, and curved. Before I get to that, let us discuss scaling (this is not a fish joke).
Exhibit 3.1 shows a chart on the logarithmic price scale. Notice that the price divisions at A (lower right) are spaced further apart than they are at B (upper right). On charts that show price making large moves (such as charts using weekly or monthly data), ...
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