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Upward trend line An upward trend line has a positive slope and is formed by connecting two or more low points. The second low must be higher than the first low for the line to have a positive slope. Note that at least three points must be connected before the line can be considered a valid trend line. The upward trend line plays a supporting role, indicating that even if prices increase, net demand (supply with reduced demand) is increasing. The price increase combined with the increase in demand is very optimistic and shows the firm determination of buyers. As long as the price stays above the trend line, the upward trend is considered solid and complete. If it falls below the rising trend line, it indicates that net demand has weakened and the trend may be about to change. Decline trend line The downtrend line has a negative slope and is formed by connecting two or more high points. The second high must be lower than the first high for the line to have a negative slope. Note that at least three points must be connected before the line can be considered a valid trend line. The downward trend line is resistance, indicating that even if prices fall, net supply (supply with reduced demand) is increasing. The price drop coupled with the increase in supply is very bearish and shows the firm determination of the seller. As long as the price stays below the downtrend line, the downtrend is firm and complete. If it breaks below the downward trend line, it indicates that the net supply is decreasing and the trend is about to come. For a detailed description of trend changes, unlike trend line breaks, please refer to the article on Dow Jones theory. in conclusion Trend lines can provide good insight, but if used improperly, they can also produce false signals. Other items (such as horizontal support and resistance levels or peak-to-valley analysis) should be used to verify trend line breakthroughs. Although trend lines have become a very popular aspect of technical analysis, they are just a tool for establishing, analyzing and confirming trends. The uptrend line of VeriSign ( VRSN ) has been touched 4 times and seems to be a valid support level. Even if the trend line in 1 Yue 00 was broken day, the previous anti should lows still there, and did not confirm the break of the trend line. In addition, the stock hit a new higher high before the trend line broke. Trend line interruption should not be the ultimate arbiter, but only as a warning that a trend is coming. By using trend line breaks to warn, investors and traders can pay more attention to other confirmation signals that may confirm trend changes.
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