What are Trendlines?

What are Trendlines?

What are Trendlines

Trendlines are basic tools used in technical analysis. They actually show the ups and downs occurring in prices of a security in the market.  It is a graphical representation tool which helps the traders determine the current direction in which the market is moving. Learning to identify a trend using trendlines is a basic step for traders to make a profitable trade. If trendlines are drawn correctly, then it is easier to understand the market and in which direction it might be moving. In order to make a valid trendline one must locate and connect at least two tops or bottoms on the chart and if you can find three tops or bottoms then that is a confirmed trend. An important point to remember is to not force the trendlines where they do not fit. The market will form a trend, you just have to be smart enough to find them.

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