Trend line is a simple momentum indicator that can measure the rate of increase in the share price over time. It also alerts a trader to any acceleration or deceleration of the trend. It can be used to recognize and verify existing price trends. You can draw it on any time frame and it can be used on any price chart. The distinction between trend lines and other momentum indicators is that you employ a super-computer to visually recognize the trend, rather than a one-dimensional formula calculated on your PC.
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Trend Line fundamentals
You will draw trend lines through the lows of an up-trend — and through the highs of a down-trend.
For long-term charts, you should draw trend lines through closing prices.
You will use either normal or log scale charts but be conscious of their respective weaknesses.
Trend lines must be appreciated by at least three lows (or highs in a down-trend) — if appreciated twice, the trend line is not yet complete.
Trend lines should not meet (cut across) price at any point on the chart if extensive.
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