Basic concepts of trends - lesson 9
Trends are affected by the next longer and next shorter trend. A rising long term trend causes the intermediate trend to have larger rallies and smaller retracements and the short term trend causes the intermediate trend to ebb and flow. A falling long term trend causes the intermediate trend to have smaller rallies and larger retracements while the short term trend, again, causes the intermediate term trend to ebb and flow.
Trend lines
One way for an analyst to see the trend is by drawing what are called trend lines. A trend line is a straight line that connects two or more price points and then extends into the future to act as a line of support or resistance. Many of the principles applicable to support and resistance levels can be applied to trend lines as well.
Uptrend line
An uptrend line is a straight line drawn upward to the right that connects two or more low points. The second low must be higher than the first for the line to have an upward incline. Uptrend lines act as support and indicate that there is more demand than supply, even as the price rises. As long as prices remain above the trend line, the uptrend is considered to be intact. A break below the uptrend line indicates that a change in trend may be occurring.
Click link to download
