Trend Lines Support and Resistance levels

Trend Lines Support and Resistance levels
In this article we will discuss the widespread, well-known key element of technical analysis. Why do you think technical analysis, especially some elements work so well for financial markets? Why do you think Fibonacci levels are usually strictly followed? Because thousands and billions of traders and computer trading programs use these elements. In this way all act the same at the same time ...
This is why we decided to present the category of technical analysis, commonly used and well known methods of predicting financial evolution. These methods are easy to understand and very effective.
We will present the trend lines. These lines can be support or resistance of the table. We will also learn what they are and how much can be drawn. We will give some examples of lists of S & P 500 e-mini and Dow and analyze how these lists can be interpreted and used for profitable trading day. Finally draw conclusions.

First What are the trend lines?

The trend lines are lines that join two or three or more blogs or blogs in the table. The price jumps when these intersect lines.If talk to support trend line, it joins two or more blogs on the table.
Every time the price line closes, it will rebound and go up.A resistance line is exactly the opposite. It joins the wind chart. When you get to this line, the price jumps and go down.A trend line can be straight or diagonal line.
The straight lines are strong resistance or support lines and show a calm market during the accumulation. Diagonal trend lines show that we have positive or negative move table depending on whether it is upsloping or downsloping line.

The second As we can draw trend lines?

Usually these lines are merging together extreme wind or downs of the table. The price must never cut these lines! If the trend line crosses it loses its meaning and price will go beyond that.
If the price crossed resistance trend line, it will go up an important amount. For the cost will reach high, it will decrease until it meets the former resistance line that has now become a support line. The price will rebound several times on the line, while you break.
It is also supported by trend lines.

It is fairly easy to apply this information in trading. The price jumps to line resistance will determine the trader to go short with stop loss placed above the resistance line. When the price comes back on line to support the trader would go long and place the stop loss line.
If the price will break the trend lines, the merchant must adapt to new trends and to initiate the transaction properly, putting an end loss on the other side of the broken trend line.

Let us study some examples:

First The table shows the period between 2000 and 2001 U.S. indexes. In this case the trend is one of accumulation, neutral.
After a period of a positive trend, the price penetrates the support trend line, the market goes down, while the new line up and support to new resistance line. From this point, almost two years, the evolution Dow was between these trend lines. When the price meets the support line is no reason to buy, and when meat resistance line to sell ... quite clearly, righ?

The second This is a table for U.S. indexes in the period between 2002 and 2003. After the "head and shoulders" pattern, the price breaks the support trend line and shapes and ascending slope. The trend now has a new support and resistance line to show the trader when to buy and when to sell. After three jumps from the support trend line, the price goes up again and an upsloping trend that will last more than a year.

The third In this example we have a series of minitrends formation of the ladder. The price goes up, then down. After support trend line is broken we need to initiate sales positions. Mon resistance trend line is broken, we should initiate buying positions.

Conclusions

First You can observe how useful these trend lines. Support and resistance trendlines are key elements in analyzing trends and provide useful information about the best time and method of making a transaction.
The second Trading methods based only on this trend line analysis can be found and can work very well. These methods can be harmoniously related to other methods of financial analysis resulting in a complete and complex trading system approaching financial realit.
The third We often use these trend lines among other various methods of analysis will be described later.



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