Archive for Trend Lines
Chapter 7 – How to draw trend lines
Posted by: | CommentsThis is an excerpt from the Liberated Stock Trader Academy Book and Training Course. Chapter 7, Section 2.
Drawing trend lines is one of the most important skills of a technical analysts, trend lines represent important areas of support and resistance. Once you have this skill, charts come to life and start to signal their message to you.
Follow the four simple steps below to begin drawing your first trend lines.
TeleChart2007 chart courtesy of Worden Brothers, Inc.
Ticker:SOHU April 2009 Up Trends
- To evaluate an upward trend draw a line joining the highest highs
- For the floor of the uptrend draw a line connecting the lowest lows. The price here bounces 3 times off the bottom line but then proceeds higher.
- A trend line is drawn to show that price has moved strongly past the previous high this is a BUY Signal at $35.50.
- Finally the price is exhausted and falls through the bottom resistance line at $51. This break of the upward support line is a sell signal.
Quick Tip: The more bounces off a trend line the stronger the trend.
2. Trend Lines, read them or weep! Learn Stock Trading
Posted by: | CommentsIf you cannot draw a Trend-line you should not invest in the stock market!
In this section we will examine how to look at price movement and use it to evaluate the stock.
Price is known as the most important indicator and so it should be, when it boils down to it the most important thing is the price.
Here we can see a chart of Broadcom (BRCM), one of the darlings of the tech bubble; I lost plenty of money on this one through inexperience and greed I have overcome both of these personal flaws since 2001.
TeleChart2007 chart courtesy of Worden Brothers, Inc.
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3. Using Trend Lines to make buy and sell decisions
Posted by: | CommentsUsing Trend-lines to make Buy and Sell Decisions
So we have seen the Sideways Channel and the W bottom. But how do we know when a stock is going to take off. The truth is we never really know. All we can do is make judgments based on what we see.
Do not forget we are only buying Stocks of companies that have
- Excellent Earnings per Share
- Strong acceleration in the growth of Earning per Share
- Excellent Revenue growth
So we are in essence giving ourselves a great head start and reducing our overall risk.
