An important concept in technical analysis is the determination of the trend of the market. This article will further elaborate on this important facet of classical technical analysis with a detailed study of trendline. In addition to helping to identify the prevailing trend, trendlines offer clear indicative support and resistance levels to the price movement. As a trader or investor, identifying those levels of support and resistance are key ingredients to successful trading. A support level is a price level that has strong buying strength that can absorb all the selling strength leading to an arrest to further declines in price. On the other hand, a resistance level is a price level where sellers are so abundant that it prevents further increase in price. For an effective trading strategy, such support and resistance levels must be determined.
Source: Ng Ee Hwa
