What is the Core Relation Between Trendline, Support and Resistance?

Crypto Trendlines - Finwatchers.com
Initially most traders get stuck with the confusion in trendlines and support/resistance, while starting their trading and investing journey.

They think of these concepts as different, that they are not. In any given timeframe, trendline structure consists of support and resistance.

The trendline is a way to quickly identify the ongoing trend in any financial market -- be it stocks, bonds, commodities and even cryptocurrency markets.


The trendline is a set of easily recognizable horizontal lines which forms whenever traders connect a series of price data on a candlestick graph.


Trendline forms when a trader draws a line over the spiked highs and under the spiked lows to the prevailing direction trend.


The trendline shows the bears and bulls dominance in any time frame shows few data's amazing fit. If you are aware about trendlines, you can easily find trends. 


How Many Types of Trendlines Exist? 


Mostly technical analysts try to find a bullish trendline and bearish trendline while predicting the further move.


Bullish trendline suggests the bulls' existence on the asset, and bearish trendline suggests the bears' dominance over the asset.


Although, trendline creates the one-sided path on behalf of time frames that you are using while drawing.  


A single trendline displays a clear reality of the trend which can be applied to create channels of the highs and lows.


But how can we discover these trendlines or channels? Don't worry, here's the example:


Let’s Have a Look of Bearish Trendline


Source: Tradingview


We can see above the chart that Ethereum traded lower below the sloping trendline from 21 May 2021 to 30 July 2021, it was around 40 days' decline.


Although bulls attempted to break this visual representation of resistance over the daily time frame, they got rejections several times before breakout because of bears' dominance.

 


Source: Tradingview


Just like the bearish trendline, the bullish trendline plays a key role during higher-low momentum. Also, the view of the chart shows buyers' dominance as pivot lows draw a trendline (blue) below the price.


Amid uptrend, bulls barely kept price above the horizontal trendline, but after the breakout, they failed to hold it. 


The trendline is a very simple tool of trading, which is easy to use and even beginners can recognize it. To create a trendline, price action must have two spots on the graph.


But be aware while using trendlines because sometimes it could be a trap if you use it in the wrong time frame.

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Disclaimer:
This information is for educational purposes only and does not constitute investment advice. No person should rely on it to make any investment. Investing carries risks, including the loss of capital. All opinions expressed are subject to change without notice. Past performance is not indicative of future results. Always seek the advice of a licensed investment professional before making any investment.