How to analyze the market using trend lines?

Trend lines show the brief deviations and regressions of prices against the main trend by connecting high and low points, allowing for extended predictions of key levels. They must be tested multiple times, and as long as they do not break critical points, they hold analytical value.

In financial charts, trend lines reflect supply and demand:

- An ascending trend line indicates a support level (strong buying power, demand exceeds supply), making it difficult for prices to fall below;

- A descending trend line indicates a resistance level (weak buying power, supply exceeds demand), making it difficult for prices to break through.

If prices break through support or resistance levels, the original trend may become invalid, and the direction may reverse. When analyzing, it is essential to consider trading volume; for instance, a price increase accompanied by a decrease in volume may indicate inflated demand.

To draw a valuable trend line, at least two points need to be connected, with three or more points being more effective—multiple touches without breaking indicate that the trend is not a random fluctuation.

Additionally, attention should be paid to the chart scales:

- Arithmetic scale: Price changes are based on absolute values;

- Semi-logarithmic scale: Fluctuations are reflected in percentages.

Different scales present highs and lows differently, affecting the drawing of trend lines.

In summary, trend lines are effective tools, but their accuracy is subject to the subjectivity of point selection, and it is necessary to combine various technical and fundamental analyses to reduce risk. $BTC $ETH $SOL #ETH走势分析 #币安Alpha上新 #比特币流动性危机 #下一任美联储主席人选 #ETH巨鲸增持