December 11, 2008
How To Pick Trendlines in Stock Charts
By Planet Wealth
Support and Resistance lines have always been lines that can change roles as a stock breaks through them. But they are not the only ones.
Trend lines, up or down, can do this too. Wow has a fantastic example of it at the moment. There is an up trend line that has been valid support from October 2005 that changed to a valid resistance in July 2008.
On the reverse side there is a down trend line giving resistance from the high in December 2007 that changed roles to support in August 2008.
When doing line analysis, it is always a excellent thought to keep extending your trend lines, even when a stock breaks through them. They can become a valid line on the other side in the future.
(click on image to enlarge)
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