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How good are Trendlines?

Krelian99, Tue Feb 14, 2017 3:45 am

The trendline is a very common way of western technical analysis and the basic for further PA analysis like chart patterns. Most beginners would say that it is subjective, but since most pros with much money use it, it is at least a self-fulfilling prophecy.

Draw the lines always manually. Take a Low and search a higher Low respectively a High and a lower High. The lines are no unbreakable lines, there are often wicks above or below and also false break outs occur. These are good signs that the market respects the line and to react accordingly. TL-indicators just connect two Highs or Lows that lay side by side what is absolutely wrong. Three points validate a trendline, so you can watch how the market behaves on that point and when the price possibly comes to the trendline back again later.

Surely, it needs some time of exercise, but it is totally worth it and later you'll see the lines with your eyes already. It helps you to identify other multi-trendline patterns like Channels, Pennants and other PA patterns like SHS, Double Bottom/Tops and even static Support/Resistance lines and zones and this edge you shouldn't miss.
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