Why I Draw Trendlines
- Posted by UpsideTrader
- on March 12th, 2012
Sometimes trend lines and moving averages work the same way. Occasionally I will draw an uptrend or downtrend line and notice that it is amazingly close to a key moving average. So on the charts below I took out the moving averages to show just the trend line. Less noise. Many times it can be more powerful. A break of a trend line can imply just that, a change of a trend.
Sometimes an uptrend line will break lower, you get all jazzed up to short it, then it whips higher for a day or two. The “street” will overthrow the trend line to shake people out, squeeze your short, only to kill it a day or two later.
Stocks that break an uptrend line with volume can be great shorts. Here are a few basic examples.
$ANR is a good example of a stock that did a great job of holding its uptrend line….until it didn’t. As you can see 0n 2/22 it finally broke and closed below the uptrend line, but rallied hard the following two days. The stock didn’t hold, and was good for five quick points to the down side.
$HPQ successfully tested its uptrend line four times before the lights went out.
$FSLR has been a waterfall of bear flags since back in August. It broke its recent uptrend line though in late February. That’s all she wrote.
Those are just a few examples. This is very basic stuff, but if used properly it can save or make you some real money.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus