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Trend Lines & Channels
Trend appears when price is going upward or downward over a specific time period. In an upward trend,
each price hike reaches a higher level than the previous hike and each price decline halts at a higher level than the
previous decline. Upward trend is also known as uptrend.
Here is an example of trending price movement :
In an downward trend, each price decline drops to a lower level than the previous decline and each price hike halts
at a lower level than the previous hike.
Downward trend is also known as downtrend.
Sideway (Range Bound Market) happens when price hikes halt at the same level than the previous
hikes, and when price declines halt at the same level than the previous declines.
Trend Lines Trendline is a bounding line connecting two or more consecutive bottoms (illustrates a bullish power) or a bounding
line connecting two or more consecutive tops (illustrates a bearish power). A trendline can be drawn along the tops of a downtrend,
or along the bottoms of an uptrend.
Factors Affecting Trend Lines Strength
Timeframe's Length of the trendline The Longer the timeframe, the more valid the trend line. A monthly timeframe trendline is more valid
than a week timeframe.
Trendline's Length The Longer the trendline, the more valid the trend line. A longer trendline shows a major pattern over a longer
period. And is likely more important than a shorter trend line.
Trendline's Number of Hits The more frequent price hit a trend line, the more valid the trend line. A trend line which is hit 3 times by the
price signals a more valid than a trend line which only receives 2 hits.
The Angle of a Trend Line The steeper the trend line, the faster the action of a group of traders. A trend line that has a 60 degrees angle
shows a faster action of a group of traders than a 45 degrees trendline.
Number of Trading Volume relative to direction of price movement The larger trading volume which is moving in the same direction of a trend line, the more valid the trendline . If
price is moving in the direction of a trend line with a greater volume, it confirms the trend. If price is pulling back to
a trend line with smaller volume, it also confirms the trend.
Channel Trendlines
Price Channel is made up by two parallel trend lines. One trend line is connecting tops of price hikes
while the other is connecting the bottoms of price declines. The wider the channel the stronger the trend.
Trend appears when price is going upward or downward over a specific time period. In an upward trend,
each price hike reaches a higher level than the previous hike and each price decline halts at a higher level than the
previous decline. Upward trend is also known as uptrend.
Trend Lines
