Do Trendlines work?

Discussion in 'Technical Analysis' started by duard, Apr 3, 2005.

  1. duard


    I am starting this thread to propose an hypothesis regarding why I believe trendlines are significant, not random and of use in trading.

    I believe many "major" trendline breaks are correlated to "news" or "fundamental" changes in a given market. Trendline breaks then reflect this change.

    For instance let's say you have an 11 market day uptend on a daily chart. HH and HL. But then oil, inflation, non-farm payrolls, etc. fundamentally change the perception of the current price trend and you get a price trend break from up to either down or consolidation.

    That is why I believe trendlines work.

    Any thoughts or research to support or refute this simplistic view of trendlines is welcomed.

  2. colion


    How do you explain trendlines that extend over decades? Surely, not news, etc. I suspect they reflect normal growth/decline behavior.
  3. Trendlines work and don't work.

    The correct answer is both yes and no
  4. FredBloggs

    FredBloggs Guest

    trendlines are total bull shit.

    they exist only in the eye of the beholder.

    where you draw a trendline will be different to where someone else may draw a trendline. To use them for generating entry signals is about as useful as random entry.

    also, where you draw a trendline will depend on how the chart scales are calibrated.

    visual containment is about their only use. but if you cant tell the direction from simply looking at a chart then you have problems.
  5. The mathematical theorems that underlie all trendline formula, state as axiomatic, that none of the data points used as input for the trendline, can exist beyond the endpoints of the trendline.

    Therefore, attempting to use a trendline to predict future direction of a security is impossible, because the science behind that trendline prohibits such predictions.

    That was the long version of saying that I agree with you...trendlines are total BS.

  6. This seems to be the key point that's missed by 99% of contributors to 99% of discussions on this subject.
  7. PetaDollar

    PetaDollar Moderator

    A trendline's job is to connect two or more swing highs or lows. I never have problems drawing a best fit line through a few points. So I would say trendlines work very well. On the other hand, if someone thinks a trendline's job is something other than what it is supposed to do, like fill his pockets with money, or predict a future price of something, then I could see the problem.
  8. agpilot


    To duard: I have to reply to the following:

    Registered: Feb 2004
    Posts: 777

    04-03-05 02:24 PM

    trendlines are total bull shit.

    they exist only in the eye of the beholder.

    There is a couple books by a well know successful Trader
    named Victor Sperandeo. The book is: Trader Vic- Methods of
    a Wall Street Master. The book and the person are fairly well
    respected on Wall Street. Get it. Read it. Use his methods.
    ignore Fred. (he hasn't made any real profit like Trader Vic has.)

    In chapter 7 Trader Vic lays out his methods of using Trendlines.
    That info is well worth your $ and time to read and use. agpilot

    PS: If your serious, ask questions on a better forum.
  9. LOL Fred,

    Why don't you say what you mean for a change instead of always pussy footing around?

    FWIW it doesnt matter whose eyes they exist in or that they do (to an extent) change for different time/tick/volume scales. It also doesnt matter that they may get penetrated to some extent before continuation.

    All those things just stop someone who doesnt do the work from being able to use them. Which is as it should be.

    For me, Trendlines, and more importantly Trendchannels, do work :cool:
  10. There is no better forum.
    #10     Apr 3, 2005