What is a Trend Line?

A trend line is a commonly used tool in technical analysis and trading. It’s a line drawn on a chart to connect specific data points, typically price levels, to help visualize the direction and structure of the market.

The main purpose of trend lines is to highlight the overall trend in price movement. For example, when the price of Bitcoin touches a trend line multiple times, it may indicate an uptrend. Traders use these lines to understand market dynamics more clearly and, in some cases, to develop trading strategies based on how the price interacts with the trend line.

Trend lines can be applied across various time frames—from minutes to months. However, trend lines drawn on higher time frames are generally more reliable than those on shorter ones.

The validity of a trend line also depends on how many times the price has touched it. According to conventional analysis, a trend line should be tested at least two or three times to be considered valid. The more times a trend line is tested without being broken, the stronger and more reliable it is likely to be.

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