Technical analysis forecasts the direction of prices through the study of past market data, primarily price and volume, and to do so the technical analysts can use trend lines and channels.
A trend line measures the gradient, or slope, of the price. These can be upward sloping, downward sloping, or flat (for example the boundaries of a range). A break of a trend line confirms that the trend is no longer continuing at the same pace, which can be the first indication of a turn or a pause. However, if the original trend was very steep, a break may just signal a return to a more “normal” gradient.
A channel consists of two parallel trend lines, which contain the price action. In an uptrend, a support line is drawn off the lows and a resistance line may be found by drawing a parallel to that off two highs. The reverse is true in a downtrend.
Martin Walker founder of ForexTradingLondon.com will be presenting a webinar explaining in depth the use of trend lines and channels on the 10th of July. So do not miss the exciting ActivTrades free webinar that would help you improve your trading technics.
I strongly recommend and for those interested in watching just click here.
Did you miss it? If so, you can still watch free the replays on the Webinars archive.