Technical Analysis

Home

  
Charlie Aitken
SMM(B) Ltd.

Trends/Trend Channels

Identifying a trend is the most basic of charting tools. A rising trend is the result of an upward zig-zag of price movement which is a result of increasing strength of buyers Vs. a decrease in the strength of sellers.

Conversely, a declining trend is the result of a downward zig-zag of price movement, a result of an increase of sellers Vs. a decrease in buyers

A trend line is identified by drawing a connecting straight line across either the rising bottoms or declining tops.

A trend channel is then identified by drawing a parallel line to the rising or falling tend lines.

It is clear on the chart when a trend ends.

When a trend line or channel is broken it should be taken seriously as it's a signal that the previous balance of sentiment no longer exists.