Trend Line
Tue, Apr 15A trend line is a graphical representation on a chart that consists of a sequence of highs or lows forming a straight line. It is created by connecting two or more price points with a straight line.
The main purpose of a trend line is to highlight the historical trend of price movements and to indicate levels of support and resistance. In technical analysis, trend lines are fundamental components of various chart patterns, including trend channels, wedges, flags, and triangles.
Trend lines serve several functions:
- To identify and confirm trends
- To forecast levels of support and resistance
Trend lines can be drawn from highs (indicating resistance) or lows (indicating support). To create a trend line, simply connect either the high prices or low prices on a price chart. The resulting line represents the trend line.
Typically, the trend line is extended into the future to identify sloped areas of support and resistance. They visually represent support and resistance levels. While only two points are needed to draw a trend line, using more points strengthens the trend line's validity.
There are two main types of trend lines: ascending and descending.
Ascending Trend Line
An ascending trend line, or uptrend line, is created by connecting the lows, where the most recent low price is higher than the previous low price. This line extends into the future and can be viewed as a level of support. Lines with a positive slope that support price action indicate increasing demand (more buyers than sellers). As long as the price remains above this line, a bullish trend is in place.
Descending Trend Line
A descending trend line, or downtrend line, is the opposite of an ascending trend line. It is formed by connecting the highs, where the most recent high is lower than the previous high. This line also extends into the future and serves as a level of resistance. Lines with a negative slope that resist price action indicate increasing supply (more sellers than buyers). As long as the price stays below this line, a bearish trend is present.
The common trading strategy regarding trend lines is that if the price bounces upward from a trend line's support or downward from a trend line's resistance, it indicates the trend's strength. Prices often retest a sloped trend line multiple times before breaking it.
When a trend line is broken, especially with high trading volume, the momentum can push the price significantly above or below the broken trend line, signaling a potential trend reversal.
Traders may have varying opinions on how far apart the connected price points should be and whether the trend line should connect to a candlestick's wick or body. Regardless of the method used to construct trend lines, it is important to remember that all trend lines will eventually break.
Recommendation
Taiwan New Dollar (TWD)
The Taiwan New Dollar (TWD) serves as the official currency of Taiwan. The currency code for the Taiwan New Dollar is TWD, and it is commonly represented by the symbol “NT$” or “元“.
Tajikistan Somoni (TJS)
The Tajikistan Somoni (TJS) serves as the official currency of Tajikistan. The currency code for the Somoni is TJS, and it is commonly represented by the symbol “ЅМ” or “сомонӣ.” The National Bank of Tajikistan oversees the issuance and management of the country's money supply, along with the establishment and execution of monetary policy.
Take Profit (TP)
Take Profit orders are crucial instruments for traders aiming to secure their profits at a set price point. By placing a Take Profit order, traders can guarantee that their positions are closed at a beneficial price, minimizing the risk of losing profits due to market volatility.
Tankan Survey
The Tankan Survey is a detailed and significant economic report released by the Bank of Japan (BOJ) that offers important insights into the nation's economic state. This survey is closely monitored by policymakers and analysts as it provides a snapshot of Japan's business sentiment and acts as a leading indicator of the country's economic performance. It is regarded as a major market influencer for JPY currency pairs.
Tanzania Shilling (TZS)
The Tanzania Shilling (TZS) serves as the official currency of Tanzania. The currency code for the Tanzania Shilling is TZS, and the commonly used symbol is “TSh” or “x/y.” The Bank of Tanzania oversees the issuance and management of the country's money supply, in addition to establishing and executing monetary policy.
Tariff
A tariff is a tax levied by a government on goods and services brought in from other nations. Tariffs have several functions, such as generating government revenue, shielding domestic industries from foreign competition, and shaping trade policies. In addition to being a revenue source for the government, tariffs can regulate foreign trade and impose taxes on foreign products to promote or protect domestic industries. Tariffs are among the most commonly used tools of protectionism, alongside import quotas, export quotas, and other non-tariff trade barriers. The term "tariff" comes from the French word tarif, meaning 'set price', which is derived from the Italian tariffa, meaning 'mandated price; schedule of taxes and customs'. Ultimately, this term traces back to the Arabic word taʿrīf, meaning 'notification'.
