Why Do We Use Stocks Trend Lines?

Stocks traders use stocks trend lines in stocks technical analysis because stocks prices move in stocks trends and the best stocks tool to interpret these stocks trend are the trend lines that are to indicate the direction of the trend either upwards or downwards.

Stock trading trend lines are also commonly used by traders because they are the most simple form of technical analysis that is used by many traders to determine where to open buy or sell stock trades.

Stocks Trend lines work by indicating the support levels of stocks prices or the resistance levels of stocks prices.

Stock prices move in a series of support and resistance levels and these series of support & resistance pattern then forms a general market direction either upward or downwards.

Traders use stocks trend lines to depict these patterns on the stocks price charts as shown on the stocks example illustrated and explained below:

Minor Resistance/Support levels

In minor resistance & support points the stocks price will quickly form these points in the short term and quickly move past these resistance and support points during a stock trend.

Upward Stocks Trend: The upward stocks trend pattern of this minor resistance and support points will form a sequence of levels whose general direction is upwards.

Upward Stocks Trend Series of Support and Resistance - Why Do We Use Stocks Trend Lines?

Downward Stock Trend: The stocks trend pattern of this minor resistance and support points will form a sequence of levels whose general direction is downward.

Downward Stocks Trend Series of Support and Resistance - Why Do We Use Stocks Trend Lines?

Traders then analyze these trend line using stocks trend line technical analysis to determine when and where to open a buy or a sell stocks trade depending on the direction of the trend line.