In this case, utilizing a trendline in your analysis should be minimized. If a trendline on a daily chart is steeper than 45 degrees, it is usually seen as an unstable rate of buying and selling. I primarily use trendlines on a daily chart (each candle represents one day) as I have found those to be the most reliable. A channel can help forecast how a stock may be rangebound as it continues to move higher or lower. You can combine an upper and lower trend line to form a channel. A trendline can be drawn in two ways it can connect price highs as an "upper trend line" in the form of resistance or price lows as a "lower trend line" in the form of support. The rule of thumb - the more times price touches or approaches a trendline, the better representation it has on price action. To me a trendline is "a line of best fit that aims to connect as many points as possible on a chart, without cutting through too much price action, in order to better understand a possible change in the rate of acceleration in buying or selling." Trendlines should aim to connect three or more points together, but it is possible for a trendline to only have 2 points. Throughout my career I have altered this definition a few times as my knowledge and understanding grew.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |