Why do trendlines work?

Am interested in the reasoning behind why trendlines work? For example, why is it that SOMETIMES, prices will still respect a trendline drawn and extended many days before?

Thanks

why do pigs fly?

Oh, thats a good one brother

Trading is basiclly a supply and demand interaction. Assuming you pick the trendlines correctly, and many other traders also have that point in heart as apossible turning piont, {like S/R, (although lighter)}, at that point they place thier stops, price has a way of reacting at that point...imo

Did you get a losing trade? This forum is for helping rookies, not having a laugh.

Firstly, you have to help yourself, asking here wont help you, try to concentrate what happens next rather than asking why...?
there are plenty of threads started and just few are worth of reading, try to find them....
peace rookie boy

A trend line is 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 ( supply demand )

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pivot tricks

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My (non) expert opinion is that they, along with things like Fibs, S/R, etc all respond because of psychology. The more people using X, the more price will react in one way or another. If nobody used trendlines, they'd for all intents and purposes not exist. The same is true to a lesser extent - if the trendline is WRONG or not extremely visible, then less people are going to use it and thus, reaction is diminished.

It's basically a self-fulfilling prophecy - to an extent. Of course, there are exceptions. Like what if there was a clear-as-day trendline (which are generally weak anyway) that would say to buy, but fundamentally everything is screaming sell. Chances are that the trendline won't be upheld...

Make a little more sense I hope?

My trendlines screamed sell, and I listened....







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If you never ask, you'll never know. For a rookie, observing what happens can only tell you so much. The guidance of more knowledgable traders here at FF can definitely speed up the learning curve.

Besides, it's just bad form to make fun of a post that was sincerely trying to understand a subject better. This is after all the rookie forum. If you have nothing constructive to say then why not STFU.

Thanks and regards to those who did offer there opinions. Appreciated.

Trend lines are much the same as any other indicator in trading. They are simply a guide as to what price has done and an indication of a point in time where you may get some sort of reaction.

The key thing to remember here is that all these points of interest are only 'potential' and should be considered as fluid. If you want to get the best from diagonal TLs it's best to do some serious research into what constitutes a valid line. If you look around this site you'll see all sorts of crappy lines that are no good to man nor beast.

As a rule I would say that your key lines are set on no chart lower than Daily and there must be a minimum of two touches before a line becomes valid. The more the better. You will find that you want to draw a line and can't decide which points to include so you might want to use the line chart. This shows each Daily close plotted as a continuous line. It's much easier to connect points using this method.

Horizontal S/R are better in my view, but that's my view, others will differ.

See attached images as this tells a complete story for you and should set you on the right path.

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If you always ask stupid questions why should anyone bother to answer them cleverly? Are you trying to be one of the mercy searching rookie?
work hard and get what you want... no other way....
my first post was a lesson for the future... you didnt get it...
peace out rookie boy

Dont worry about it pambeesley, there are plenty of members who will help(myself included) and they arnt still in diapers like vaflis.

sometimes trendlines work because a lot of traders draw and trade trendlines in charts

Trendlines seem to work because they are nothing but combination of price points and time points. Both have fixed measurable intervals. Since one moves up or down and other moves from left to right they produce a comparatively stable relationship.

For example prices would generally move from 1.4500 to 1.4600 to 1.4700 to again 1.4600 to 1.4700 then 1.4800 then 1.4900. Now if each of such movement occurs in a day and you draw a graph it will have following readings / points.

Day 1 - 1.4500
Day 2 - 1.4600
Day 3 - 1.4700
Day 4 - 1.4600
Day 5 - 1.4700
Day 6 - 1.4800
Day 7 - 1.4900

Now without drawing a trenline you can predict that Day 8 will be 1.5000

In practice price does always move in round numbers but in sub-sets of round numbers producing a consistent effect. What do I mean by sub-set of round number is:
Price 1.4500 to 1.4600 may be divided into certain blocks, lets say 10 of .0100 each. These blocks may not be from 1.4500 to 1.45100, 1.45200, ...... etc. but may be 1.4500 to 1.45020 1.45080, 1.45120, 1.45180, etc. Again there may be further sub-sets within such blocks.

These all blocks may not be of equal number of pips (or of uniform size) but there will always be some sort of relationship among them because of variety of reasons including human psychology, round numbers, pivots, averages, etc. However, basically they all represent smaller sets of bigger price blocks.

If you look at the bigger time frame charts and focus on 500 pip ranges, you may notice this relationship. But again these relationships are not exact but approximate. Major price benchmarks (round numbers) plotted on time X Axis will show the trend. This is one reason why it is believed that bigger timeframes have less noise i.e. they follow fibs, trendlines, etc. more precisely than smaller timeframes. This is only because bigger timeframes hide smaller deviations.

Hey man dont you see its a roockie discussion section? If you can not post something good than stop posting useless bullshit.
The main purpose of this section is newbies. They are surely allowed to ask anything.

There is the self-fulfilling nature of the validity of trendlines, but it is reasonable to assume that there was some value in trendlines, perhaps only in theory, before they became popular enough to have gained this characteristic. When Dow and his posse started plotting charts of stocks and indexes of past price action before the advent of technical analysis, they found that their theories had value. Trendlines were respected, trends made successive highs and lows and the breaking of these levels had significance (support and resistance) despite the apparent fact that market participants were not necessarily aware of these factors. So, it goes beyond the 'people use them therefore they work' theory.

A trendline represents value of an instrument over time. This is significant because people discount value over time. If I was to offer you $100 now or $110 in a year, although $110 is greater in absolute terms, you may perceive the value of the $100 now to be greater due to uncertainty of the value of the dollar, or perhaps you think you could attract a greater rate of interest through alternative avenues. Just the same, market participants may discount value over time and the collective value/time schedule could represent itself as a trendline where supply or demand will come into the market as participants deem the price at the trendline to represent value, all else being equal.

Trendlines can also capture the resonance at which a market is 'vibrating'. If you have any experience with the Andrews pitchfork, you will no doubt have seen some instances when a median line is respected time and time again, bouncing accurately within the confines of the structure. I don't think anyone knows for certain why the relationship between the three points from which the fork is drawn has such significance upon the future path of price. If it interests you, you should delve deeper into Andrews' work, which has been extrapolated further by Tim Morge.

Finally, and this does have an element of the self-fulfilling nature about it, trendlines are a visual representation of market sentiment. People do not necessarily have to have the trendline drawn for the trendline to be significant. The trendline does not determine market sentiment, rather the market sentiment determines the trendline. Above a trendline is bullish, below is bearish (not a strategy recommendation). If a trendline is drawn accurately and based upon significant points so that it describes supply/demand within the market, it is at the point that price interacts with the trendline that buyers or sellers will glean the greatest reward for the least risk if the market sentiment continues. If the trendline breaks, then there is evidence that market sentiment could be changing, especially if price breaks the trendline hard. As in Peter's chart above, price will often retest a trendline, or the price at which the trendline was dissected, because this is the point at which market sentiment has potentially flipped. Those who were in trades will consider this a good spot to dump their positions, and those who want to ride a new trend will consider it to represent value.

All just theory of course, and we all know that in practice the markets are hectic, volatile and can trample all over our technical theories without a second thought. Trendlines are an important part of my trading, but I always bear in mind that price comes first and the market doesn't have to do anything.

STOP trading on the 1 minute time frame.

you won't have that problem

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Alright, to be honest, the reason I was nervous was not because of my use of trendlines, it was because (besides poor use of mm) of the times an obvious trade like this isn't available. You never know until you have made a complete approach for any situation, which I'm still working on.


The trendlines, if you're interested, are projective; almost the entirety of each of my trendlines has price test them after they're made, not before. Besides this, you still have to choose which one works, although again, they're easier than most trendlines in this respect also.

Ok,

What you have just described as "Vibrations" is very close to Gann theory
There are harmonic movements over time, price, space(range) and volume.

Market respect Gann Angles, channels, diagonal trendlines as this is natural cycle Time and Price relation.

Why - that is the question I am trying to find answer for

Person to follow is Connie Brown - she did the most research on Gann