Quiz 10: Significance of Trend Lines

Trend lines show the line of least resistance.

Any violation of a trend line is important, but more important would be HOW it was broken.

A support line is that line which identifies the angle of a bear swing by passing through two successive points of resistance.

An oversold position line is that line which________.

A supply line is that line which identifies the angle of decline of a bear swing by passing through two successive points of resistance (top of rallies).

An overbought position line is that line which is drawn parallel to a supply line and passes through the first point of resistance (rally top) intervening between two successive points of support in a up trend.

Trend lines that are applied to minor trends are more important than those applied to intermediate and major price movements.

By studying charts carefully, you will notice that when the price movement exhibits a tendency to stop short of or pull away from an established oversold or overbought position line, such action frequently conveys a strong hint of an impending change of pace, or a change of trend.

You should use trend lines.

Trend line (A) is an “Oversold Position Line”

Trend line (B) is the “Support Line”

Trend Line (C) is the “Overbought Position Line”

Trend line (D) is the “Support Line”

Trend lines aid in judging prices where____________.

A supply line__________.

An overbought position line__________.

The increased momentum of a rise may require the readjustment of a trend support line.

A trend line may give a helpful hint, in advance, as to the point at which new demand may be expected.

Never draw deductions from trend lines alone.

Trend lines should be established for all fluctuations.