drawing trendline

Should we include the peak and trough when drawing trendline?

Maybe we should not since peak and trough represent euphoria behaviour?

Its a judgment call. there are no ruls to drawing trendlines.

"...the highest high to the highest high PRECEDING THE LOWEST LOW."

http://trading-stocks.netfirms.com/trendlines.htm

When drawing trendlines, draw the line from:

In a downtrend, the highest high to the highest high PRECEDING THE LOWEST LOW.

In an uptrend, the lowest low to the lowest low PRECEDING THE HIGHEST HIGH.



When drawing valid trendlines, traders should watch for the stock to bounce off it several times. For example, in an uptrend markets will often pull back to the up trendline and bounce off it and make a higher high. Retests of an upward moving trendline often present excellent buying opportunities. In a downtrend, stocks will often rally up toward the falling trendline, presenting traders with short selling opportunities. It is significant when a trendline is touched at least three times and is often followed by a major move.

On intraday charts, trendlines can look quite a bit different if drawn on charts with constant time bars (eg 5 min), constant volume bars (eg 500 contracts) or constant tick bars (eg 250 ticks). The question is which is best, or even more fundamentally is this the right question to be asking.

My impression is that constant volume bars are better, but this is purely subjective and just about impossible to prove.

pssonice -

Its interesting that the writer for trading-stocks.com tells us what the rules are - and then breaks them when he draws his charts.

But even then his rules are badly stated and wrong.

Laughable.

compare the two charts..

if the trendline is drawn to include the peak, you would have thought the stock has break out of down trendline late last year...