The trend line is one of the things that are used in technical analysis. But if the trend lines are drawn correctly can be an accurate or at least provide us information about the trend. But it happens that most of the trader does not know how to draw them correctly.
In a quick explanation, as a basic uptrend trend line is drawn below the graph from the bottom (valley) which is also known to be a support. A bearish trend in the trend line is drawn above the graph from the maximum (peak of the mountain) which is known to be a resistance.
How to draw an uptrend?
In this graph we can see a trend in which he played 3 times the trend line are known as first down (1st Down), Second Down (2nd Down) and Third Down (3rd Down). But when prices touched a third time line Trends, we can say we have an established trend.
In turn you can draw a second or third trend following the main trend, ie the first.
How to draw a bearish trend?
As we see in the graphic in a graphic bearish trend line is drawn above trend in prices from a peak and when the graphic touches against the price trend. Points are known as First Ascent (1st Down) Second Ascent (2nd Up) Third Ascent (3rd Down). In this graphic we have 4 points. Remember that we only need two points to draw a trend line with 3 points and have a tendency confirmed trend.
When a trend has been broken?
It is not easy to determine who has broken a trend or a change in trend, but the trend lines help us to determine when a change in trend.
As we can see in the graphic prices have cut the line trend and prices have closed above the trend line. This indicates that there has been a trend change, and thus began a new trend. This is also known as Penetration of the Trend Line.
We have to say that when a penetration is a bearish trend, prices rise and cut the trend line, an upward trend the prices falls and cut on the trend line.
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