Wednesday, September 29, 2010

Drawing uptrend line and downtrend line

Drawing a trend line on a chart gives us very valuable information. Trend line is not only show us current market trend (uptrend or downtrend) but also support and resistance levels for market price. 

For an uptrend line, draw a line from the higher point (1st point) to the lower point (2nd point) , the line must not/cannot not pass through prices between the 1st point and 2nd point. 

For downtrend line, draw a line from the lower point (1st point) to the higher point (2nd point) , the line must not/cannot not pass through prices between the 1st point and 2nd point. 

Simple right?? here is the picture.  

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