The answer to the question below is; "It is a parallel trendline drawn from an intermediate peak parallel to the primary trendline. It's kind of a Measured Move." To understand trendline one must first understand support/resistance level represented by a horizontal line. The line is no magic line. It is not the memory of the Market. It needs not be drawn and publicized to through the media to the mass. It is in the memory of the Market participants. Why? Support/resistance level is usually the turning point of the Market, whether a peak or a trough. Why participants remember peak and trough price? It is at that price that they lose money or opportunity. They buy at the top or sell at the bottom. So they remember the price. Buyer at the top will wait until the market returns to the top near their buying price and sell. Thus the resistance level. Top with large volume will have significant resistance. Seller at the bottom will be waiting at the bottom to buy hence the support. Bottom with large volume will be a great support. Why resistance trendline trends downward? Because some top buyers average down, so they can sell at lower and lower price as time goes by. Why support trendline trends upward? Because as time goes by more and more bottom sellers decide to buy above their selling price because they are afraid the price would not come down to their break even price. No magic. If the rate of change of break even price is constant we can use trendline. If not we may have to use moving average instead.
for currency trading i find trendlines useful for times when oscillators are sideways, which is hardly random as an entry point... they can be useful when used properly as another tool of the trade
Define "work". Trend lines and technical indicators are not trading systems. I expect the same trend line (or indicator) buy or sell signals to show varying trading simulation results depending on security, risk level, margin, slippage, commission and position size parameters.
you can risk 1% of your capital on a TL breakout . Same as with absolutely any other trigger you use.
SPX rebounded from supporting trendline, it should go to 1385. If something terrible happens and the supporting trendline is broken, SPX can go down to 1295.
Wednesday will be a make or break day. Supporting Trendline without Fundamental Support may not work. The Bulls may throw in the towel now! :eek: Or will there be some miracle?
Sometimes Trendlines do not work because some Miracles are engineered. This Trendline sell signal is called a Bear Trap. When the Market is indecisive or playing tricks with you , your Trendlines may be confusing . The "Make or Break" day is poseponed for one day. Thursday may be the day with the Triangle Trendilnes breakout. Either way there may be a thrust, up or down!