Course: The foundations of technical analysis
Lesson Insights
A trendline is a line drawn on a stock chart to represent the general direction of price movement. In technical analysis, trendlines are used to identify and track trends, and to make predictions about future price movements.
Trendlines are created by connecting two or more price points on a chart, and are used to visualize the underlying pattern of price movement. They can be used to identify both upward and downward trends, and can help traders and investors identify key levels of support and resistance.
There are several types of trendlines that can be used in technical analysis, including:
Trendlines are an important tool in technical analysis and can provide valuable information to traders and investors about the direction and strength of a trend. However, it is important to keep in mind that trendlines are not absolute, and that price movements can sometimes break through trendlines, leading to significant changes in market sentiment and investment strategies.
In this subchapter the psychology of trendlines is also introduced.
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