The Basics of Trendlines in Technical Analysis
A trend is an established pattern in price fluctuations that can be expected to continue in the foreseeable future. In technical analysis trend patterns are used to detect market strength or weakness. Trend is a general term that includes the concepts of direction, period, and price. Synonyms:
Numerology: Another use of trend in stock trading is fractals indicator. Fractals are graphical representations of change, a mathematical concept closely related to calculus. According to fractals an increase in value is a function of change with time, and a decrease in value is a function of time. Trend describes the overall upward trend of prices over a specified period, typically one year. This trend can only exist for a limited time because it is a product of the ups and downs of price fluctuations in the underlying market. The trader who acts in response to this trend will benefit from its continuation as long as the price of the security is not too far from its historical average.
Stock charting utilizes the use of technical indicators like trendline, support indicators, resistance levels, breakouts, and fractals to detect trend. Trendlines are the mathematical equivalent of trendlines. When traders are trying to identify a trendline, they look for the support (ascending) and resistance (descending) lines on the chart and connect the two points on the chart, usually by horizontal slits.
Innovation Management: Trend research can also be applied to the area of innovation management. In innovation management, the focus is on understanding, anticipating, and harnessing the future price movement in specific markets. The markets for this are typically private, for the reason that it is difficult to provide quantitative information about trends. This requires the knowledge of the market maker to make projections of price action based on their own internal assumptions about supply and demand. Trend lines can provide the necessary information needed by the venture leaders to make such projections
The concept of trendlines can be applied to other areas as well. One well known application is to time series analysis. Price action of elements can be used to study the relationship between price movements and other economic indicators. Technical indicators are also used in time series analysis. A technical analysis uses a set of indicators or series of indicators to identify changes in trends. Trendlines are particularly important here because they allow the relationship between price action and other economic indicators to be determined.
Trendlines are widely used in technical analysis, alternative trading methods, and trend analysis. It is important, however, that traders become familiar with these concepts before applying them to their trading campaigns. Knowing the definition of trendlines is just the first step of being able to correctly apply trendlines in their analyses. The other step is learning to identify valid trendline targets. Once traders have developed the confidence to apply these concepts to their trading campaigns, they will find they are able to make accurate predictions about market direction.
