Understanding Trend Lines and Channels

While support and resistance are most often found in the round of integers, there is also another form of integer resistance known as the trend line. If a support level is a horizontal line, and therefore horizontal support, then a trend line should be considered as an angular or vertical support. Needless to say, this works as well for horizontal support and resistance levels as it does for traders.

In fact, the similarities are many and the tools are used in many aspects in the same way.

In short, a trendline is a sloping line whose price either has trouble rising or sinking then. It is very similar to the levels of support and resistance that traders use, but it is drawn at an angle. By this definition, trend lines only occur in a certain form of a trend. (Hence the name). Like support for resistance levels, the best are the most obvious. It is also true that the trend lines that appear in the most reliable terms are the delinquencies in most circumstances. The following chart is an example of an uptrend line or an uptrend line.

Although this sounds like such a simple thing, it really is, when you search the internet you can see people using different measures to determine their trend lines, and quite frankly – they make a lot of mistakes. When drawing a trend line, one of the most important things to consider is how many times the price has touched it. For example, a trend line that has been tested twice is not as strong as one that has been tested nine times. This is because this is the support or resistance it represents has remained true on nine occasions, showing how interested buyers become the line. In fact, as a general rule, many operators will insist on at least three touches.

In addition, there is the question of drilling. The line may be crossed from time to time, but as long as the sail closes above an uptrend line, or below a downtrend line, the line showing that it has repelled the opposition force. Some traders consider a trend line that has been perforated to be invalid, but this is a matter of comfort and opinion. While some traders are very rigid about it, others feel that as long as the line is retained with capacity for longer and in the sail closure, this simply evidences the strength. Whichever one you choose is usually your decision.

Channels

Channels are another form of “vertical support and resistance” and can be used in much the same way. The main difference is in contrast to the trend line, it is actually a pair of them running parallel. Because of this, you will have two supports and resistances in the future, as the bottom will be supportive, and the top is resistive. The same rules apply as for a line channel as for a trend line. These routes allow the operator to see the gradual increase or fall in prices over time. Think of this as a big jump market, but with a bent. Many operators buy at the bottom of the channel, and sell at the top, over and over again until the channel breaks out.

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