InvestorQ : How to draw and interpret trend lines in technical charting?
Jignesh Gupta made post

How to draw and interpret trend lines in technical charting?

Answer
user profile image
Maniish Lofar answered.
1 year ago


The basic principle of trend line is the same in that it connects two or more price points. Typically, when two or more points are connected and they show an underlying trend then a long term and reliable trend line comes into existence. 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. Trend lines are important for two reasons as far as chartists and traders are concerned. Firstly, it allows you to actually interpret and explain the past price performance of the stock or the index and give a clear direction to the trend. Secondly, and more importantly, the trend line is important because it can be extrapolated into the future so you can actually understand what are the prices levels in future that you need to watch out for? This gives important trading signals for you.