Strength Of Trendlines

[pipsaholic 10]

Hi,

 

Can a pro who has been using trendline’s tell me of their experience when usually they are broken or when best to buy or sell off a bounce or when they break? After trading for 1 year I find it breaks usually on the 4th or 5th bounce more on the 5th bounce break and the odd occasion 3rd while the 2nd bounce is the strongest.

 

Thanks.

[gosu 10]

Being an amateur myself, I too am looking forward to any "pro" out there who can respond to this newb.

[Tams 20]

Hi,

 

Can a pro who has been using trendline’s tell me of their experience when usually they are broken or when best to buy or sell off a bounce or when they break? After trading for 1 year I find it breaks usually on the 4th or 5th bounce more on the 5th bounce break and the odd occasion 3rd while the 2nd bounce is the strongest.

 

Thanks.

 

you can start here:

The Price / Volume Relationship

http://www.traderslaboratory.com/forums/technical-analysis/6320-price-volume-relationship.html

 

 

 

 

 

 

 

[pipsaholic 10]

That is one of the most helpful posts I have read on a forum many thanks.

[pipsaholic 10]

I got this from a blog which is excellent info on trendlines:-

 

Factors Affecting Trend Lines Strength

 

1. Timeframe's Length of the trendline

The Longer the timeframe, the more valid the trend line. A monthly timeframe trendline is more valid than a week timeframe.

 

2. Trendline's Length

The Longer the trendline, the more valid the trend line. A longer trendline shows a major pattern over a longer period. And is likely more important than a shorter trend line.

 

3. Trendline's Number of Hits

The more frequent price hit a trend line, the more valid the trend line. A trend line which is hit 3 times by the price signals a more valid than a trend line which only receives 2 hits.

 

4. The Angle of a Trend Line

The steeper the trend line, the faster the action of a group of traders. A trend line that has a 60 degrees angle shows a faster action of a group of traders than a 45 degrees trendline.

 

5. Number of Trading Volume relative to direction of price movement

The larger trading volume which is moving in the same direction of a trend line, the more valid the trendline. If price is moving in the direction of a trend line with a greater volume, it confirms the trend. If price is pulling back to a trend line with smaller volume, it also confirms the trend.

 

Channel Trendline’s

 

Price Channel is made up by two parallel trend lines. One trend line is connecting tops of price hikes while the other is connecting the bottoms of price declines. The wider the channel the stronger the trend. The steeper the channel, the more likely it is that price will break out of the channel downward.

[gosu 10]

you can start here:

The Price / Volume Relationship

http://www.traderslaboratory.com/forums/technical-analysis/6320-price-volume-relationship.html

 

 

Now you've done it. . . .

[ratmpower 10]

When you are basing your strategy on trendline, make sure that there is no major event scheduled (earning announcement, FDA approval etc) for company - as these events are known to break the trend and start new trends.

[SIUYA 11]

When you are basing your strategy on trendline, make sure that there is no major event scheduled (earning announcement, FDA approval etc) for company - as these events are known to break the trend and start new trends.

 

i thought depending on how/where you draw your trend line a move of the price through the said line is the reason for the trend break.....not because of some major event.