-
Traders should
go with the trend for as long as it lasts.
-
The resistance
line is the highest point a share price reaches
and the support line the lowest. The more the lines
are tested, the more effective they will be.
-
A trend line may
be drawn against three tops or bottoms in succession
and it confirms the trend.
-
A trend channel
covers the area between a trend line representing
resistance and another representing support. If
the stock is volatile, it may be traded profitably
inside the channel.
-
Look for continuation
patterns to confirm a trend, and reversal patterns
to indicate that it is changing.
-
A breakout should
last for as long as the depth of the pattern that
precedes it.
-
Fibonacci ratios
offer a numerical sequence claimed to define some
stock market movements. A stock market trend is
considered likely to retrace itself by 61.8, 50
or 38.2 per cent.
-
Elliott Wave theory
explains market cycles as an impulsive wave of five
parts, reaching new highs, followed by a corrective
wave of three parts. The theory is controversial
and requires some subjective judgement.
