Technical analysis indicator. A simple line is the best trading indicator The simpliest technical analysis indicator is a line. Of all trading indicator you will ever find, a simple line where you can draw trend lines and support & resistance will do more than the job. The KEY trading indicator all traders look for is one that could signal the perfect entry. Well my dear friend a line does !! and very well. A line can spot Buyers and Sellers perfectly, that is why I say that it is the best technical analysis indicator. How to draw trend lines and what they are: Trend lines: Trend lines are a straight line that connects two or more price points and then extends into the future to act as a line of support or resistance Up Trend Line. With 2 higher highs and 2 higher lows we get a trend that is moving up. Normally a third point confirms the trend line, but watch out my friend. I have found that after the third point more than confirming the trend lines, The Market breaks them. Break to not mean change of direction to the downside immediately. It simply means that The Market is not strong enough to continue with that trend. Price can stay there moving sideways until more force (more buyers if uptrend or sellers if downtrend) comes in and resume the move up or finally until finally the uptrend gives way and a change of direction occurs to the downside because an opposite response entered The Market. Normally trend lines work almost like in baseball, three strikes and they are out. This means that after you get a third higher high and higher low, normally the trend line breaks at the fourth touch. As you can see a simple line gives A LOT of information, more than all of the “fancy” stock market indicators, forex indicators, trading indicators, etc… Down Trend Line: With 2 lower highs and 2 lower lows we get a trend that is moving down. The same applies here. 3 strikes and the trend line is out. Meaning that after the third point, trend lines normally break.
all of the principles that apply to Support and Resistance apply to trend lines. At the end trend lines ARE Support and Resistance…Supply and Demand Levels. Buyers vs Sellers That is why I say the the best technical analysis indicator, forex indicator, trading indicator, etc is a line. A simple line. The best of all stock market indicators…
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