I couldn't agree more that data points are required in the construction of a trendline. It is permissable to convert the "hard, right edge" into a "hard, right, gaping chasm" simply by increasing the amount of void space after the the last price marker on your realtime chart. lj
This can be said about anything involving trading...after the fact as in hindsight. Regardless, trendlines are not pattern signals nor should they be applied as such. Thus, I only see trendlines as an alert to tell me it's time to make an adjustment in my trailing stop or to tell me that one of my pattern signals may soon appear. For such...they are excellent as an alert signal. Simply, they are extremely useful before the appearance of any pattern signal or before a profitable trade becomes a losing trade... Not after the fact. Mark
So price breaking a TL is a pattern but not a pattern signal? could you then provide an example of a pattern signal and why that would qualify while a TL would not?
This is why I like point and figure charts. There is only one way to draw a trendline. It is either in trend or out of trend. There are no exceptions.
On the attached chart you will find: Obvious respect of a trendline, Consolidation at the trendline (instead of bouncing) Breakdown of the trendline This occurs over and over and over every day, every market, every stock. Now, how/when you enter and how/when you exit is a WHOLE different story and really the key to it all. Sorry I didn't post this one real time; I was busy trading it.
I can't believe this has been argued to 230 pages. Trendlines DO NOT have a psychological relevance in the market. HOWEVER, with that said they DO work simply because they're self-fulfilling. Assessing supply/demand of the underlying security is important as well. For anyone to say that trendlines don't work has some serious issues with their trading (or are in just plain denial). Do I use them? YES. Do I rely purely on them? The majority of the time no. As for the poster who said that referring back to previous actions in a securities price to see if it historically holds trend-lines is not a bad strategy to have either. Good day and best of luck EDIT: A certain type of "trendline" that I like to use is not used by many traders BTW (IF I do use it).
FWIW All I use are trendlines and candlestick congestions. I use them for entry, stops and exit points. I add this comment to provoke a little more thought for those who say "yeah, trendlines, but you also need....." or of course for those who disregard them alltogther. (which is ok if you have another way of looking at the market to make profits) Remember, whatever works! I just hope to post something here that may help someone with something because I personally think that trendlines (support/resistance lines) are Very powerful.
Agreed. Regardless what the reason is why they work, the point is they do work, and they are a critical part of price analysis.