Trend lines are lines that depict price movements, connecting the highest points of price increases and the lowest points of price decreases over a specific period, used to predict future price trends. Early trend lines were described by industry traders as 'a straight ruler conquering the world' because early trading software was not powerful enough to directly draw the desired trend lines. At that time, traders could only measure on the screen with a ruler when determining trend lines.
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The angle and direction of trend lines can indicate whether prices are in an uptrend or downtrend. If prices break below an upward-sloping trend line or break above a downward-sloping trend line, it is generally considered that a reversal may occur. Trend line analysis is a type of technical analysis method, but it works best when combined with other technical analysis methods.
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According to the different directions of the trend lines, they can be divided into upward trend lines and downward trend lines. Upward trend lines provide support for rising prices, while downward trend lines provide resistance for falling prices. Below are examples related to trend lines.